Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Link to 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.

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

Order! There is too much conversation in the chamber. The member for Farrer should be heard in silence.

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

So four times the debt ceiling was raised. Why has the government raised the debt ceiling? You raise the debt ceiling because you have to be prudent enough not to actually hit the top of that ceiling, go over it and cause the inevitable results with rating agencies. Total government debt on issue is well over $250 billion—that is the government's gross debt—and with further spending for projects such as the National Broadband Network, which I know is officially off balance sheet but it still costs the Australian taxpayer, and the Clean Energy Finance Corporation, who knows where the figure will land in May next year.

The coalition is taking, as I said, a fiscally responsible approach to this legislation. We recognise the importance of GEERS because we created GEERS. We know the good work that GEERS has done in our communities when all else has failed. I have two examples when GEERS was a lifesaver in my own electorate in the past few years alone. But this exercise of the government's is a tribute to its union bosses and the future negotiating power of those union bosses when it comes to workplace conditions, including redundancy. It is capturing that in the scope of what is a bill that should look after employees in extraordinary circumstances. This is just a concession to the trade union bosses via stealth.

The high bar that this legislation will set, by the way, is done outside the Fair Work Act. And if the Fair Work Act is as strong as the government claims that it is, and subject to rigorous review as it claims it is continually doing, then why not make the adjustments within the scope of the Fair Work Act? Why bring in this separate piece of legislation?

Ultimately a government with no proper agenda is going to have this scattergun approach—a piece of legislation to satisfy a particular interest group and perhaps in so doing wedge the coalition and say that we do not support employee redundancies or some such nonsense. People will see through that when the time comes. We do absolutely recognise the need for economic prudence.

There is a likelihood that we will see more redundancies under this government. MYEFO predicts unemployment to increase further. Business confidence in this government is incredibly low. The carbon tax has increased the cost of doing business and those opposite have cut apprenticeship incentives for employers, further exacerbating pressure on small businesses and potentially decreasing opportunities for younger Australians to pursue a trade. What worse statement of confidence in the future of our economy could there be than saying we do not need as many apprenticeship incentives for young people entering the trades? That nasty message under the radar, under cover of MYEFO, I think should send a shockwave through the sector of the Australian economy that cares about youth unemployment. Every time the government talks about unemployment it never mentions youth unemployment, because it is a government that does not have its priorities right and has failed in this respect as in every other.

I conclude by reiterating the coalition's support for GEERS. We created GEERS but we will be moving amendments to this legislation to simply cap the entitlements that employees may receive in this particular set of circumstances at 16 weeks. The scheme from our point of view will not change. The excuse that the government is giving that somehow it needs to legislate GEERS because it is not real otherwise I think is nonsense. Who is in charge of the Department of Education, Employment and Workplace Relations if it is not the minister? Why can't the minister direct the secretary of the department, as he obviously has on every single other occasion when GEERS has been used? That is just a smokescreen. The real issue here is raising the bar for future union bosses' negotiations about workplace conditions that will put employers and the economy in an impossible position.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I listened very carefully to the member for Farrer's contribution to the House on the Fair Entitlements Guarantee Bill 2012. This bill is a legislative example of Labor's commitment to Australian values. One of those key Australian values is a fair day's pay for a fair day's work. Implicit in that old saying is the idea that you will get paid. We know that for decades when companies became insolvent it was workers who were often the last people in line to get not just their wages but their annual leave, their leave loading, their long service leave, their payments in lieu of notice and their superannuation, which is one thing that needs to be thought about in all of this as well. You frequently find in this situation that employers are not paying their superannuation payments either.

This went on for decades and decades. As an official of the shop assistants union in South Australia I saw it myself not just in big and medium companies but even in small companies. Sometimes it was not the fault of the company and its directors, sometimes it was just economic circumstance, but there were frequent occasions when it was their fault, was due to the phoenixing of companies or was due to neglect by directors and the like. I have seen many examples in my time of where workers have been treated appallingly in redundancy situations and left in very difficult situations. I worked for a company many years ago as a trolley collector.

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

You'd be too small to push it.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Yes, I was almost too small to push it—the member for Mayo is helping me out. But I was younger and stronger in those days. The company I worked for ended up in receivership, and I remember my friend, who worked at the company at that time, telling me about the scenes out the front of the company of people who had not been paid in months. We would all have stories and examples from our electorate and from personal experience of where this has occurred, and it is terribly unfair to those concerned.

We heard the member for Farrer talk about the benign generosity of the previous government, about how they magically arrived at GEERS: one day, Tony Abbott rolled out of bed and thought, 'I might set up a scheme protecting workers' entitlements.' That is the proposition they want to put to the House, but we all remember the circumstances in which GEERS was created. We all remember what prompted it—it was the fact that one of the then prime minister's relations, as I remember, was the director of a textile company. That was what happened, wasn't it?

Mr Briggs interjecting—

I am just telling of the circumstances that led to the Australian people becoming aware of this terrible situation, and that is what happened. I cannot remember the year—I do not remember if the member for Mayo was working for the prime minister at that time. Maybe GEERS would have been a better scheme if he had been.

It was not some sort of government program, or some sort of deliberate review by the Howard government that brought GEERS into place; it was politics. It was political pressure by the Australian people. It was the site of hundreds of workers being left without their entitlements. The Australian people demanded that something be done, and what we ended up with was GEERS.

GEERS is a taxpayer funded scheme, and I tend to agree with the previous speaker that it is of concern that taxpayers are picking up the bill for failed companies. There are other ways you could set up entitlement guarantee schemes, and if we were starting from year zero with a blank sheet of paper we might not get the taxpayers of Australia to underwrite such schemes—we might make industry do it itself. It is truly extraordinary for industry to make these complaints when at the same time they ask the taxpayer to fund schemes like GEERS.

But we are dealing with the structure as it is, and so we have put these entitlements into a legislative guarantee so that workers do not have to worry about people like the member for Mayo and others, one day in the distant future, being in government and ripping into entitlement schemes and the like. We know they go through periods of generosity towards workers, periods of being benign towards workers, and we know that at some point they tend to turn on workers, as Work Choices proves. I remember Work Choices; that apparently guaranteed all your entitlements as well—guaranteed that you might lose them, that is. We know it is important that we have some legislative guarantee for people's entitlements.

The previous speaker said that this is all about union bosses, and some sort of arrangement with them. It is actually about our relationship with workers. That is why we want to guarantee wages up to 13 weeks. That is why we want to make sure that workers get their redundancy entitlement capped at a maximum of four weeks of service per year. This is not some sort of rolled gold union guarantee—that is not uncommon, and certainly not at the top end of town. We know what kind of payouts they take when they leave companies.

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

Holden?

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Not at Holden, but I can remember at David Jones years ago, when they were closing John Martin, a certain chief executive sailing off with a huge entitlement package while workers in South Australia, particularly long-term casuals, had to fight in court to get their redundancy payments. I remember that. It is quite common for the top end of town to have a different set of rules for separation packages, particularly in relation to stock options, than they have for the people at the bottom who actually do the work and create the value and the wealth.

The bill also guarantees payment in lieu of notice, capped at five weeks, and that is not an unreasonable thing to do. Workers do deserve notice. I have been in many situations and seen many situations, particularly in the textile industry, where companies would be saying to workers, right up until literally the day before they announced closures, that they would not be closing and that it was business as usual and all the rest of it. Often one of the things that hurt and frustrate workers most of all is the persistent lying that goes on up until closures are announced. Often workers know that the writing is on the wall; they hear the rumours. But what we often see is—and I will not call it lying—corporate obfuscation about what they are doing.

So, having a payment in lieu of notice is an important thing. Getting notice is an even nicer thing—and, of course, guaranteeing annual leave and long service leave. It should be stressed that often people in these companies—companies that are under economic stress—will not let you take your long service leave or will delay letting you take it and will delay letting you take your annual leave. So people bank a lot of leave. That is a common thing that happens.

These sorts of things are very important for workers—things like a safety net, a guarantee. We know that for decades they basically endured without these, and people lost vast amounts of money over the years, unable to obtain their funds. Or they sat in a line of creditors, behind banks and behind others, waiting for their entitlements—and we know that was a persistent worry.

There have been some unions, I have to say, who were particularly active in making sure this issue was front and centre, and the Australian Manufacturing Workers Union was one of them. I can remember them talking about this, particularly in the car components industry—people like John Camillo and John Gee, out there on the barricades making sure workers' entitlements were paid and making sure they had a guarantee of those entitlements. And I remember people like Bob Donnelly from the CEPU and others being out there on the shop floor making sure workers got their entitlements. But what we are doing here in this House is legislating to make sure union leaders do not have to fight battle after battle and fight after fight to make sure people just get their entitlements. We want to make sure that people have some reasonable certainty about their situation with regard to their entitlements in times of insolvency.

This is a very good bill. It proves that despite all the rhetoric of those opposite the Labor movement still exists for working people across this country. It puts into place important guarantees, and it should give everybody who believes in that old Australian saying about a fair day's pay for a fair day's work some reassurance that that still means something in this modern age.

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I follow the member for Wakefield, who I acknowledge has many years of experience in these issues, being a former union representative and delegate with the SDA in South Australia. I understand it has been a difficult day for the SDA in South Australia today within the Australian Labor Party.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

We won on the floor!

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

You won on the floor. It was an empiric victory that Don had to have, and then prove later that he could happily stand aside and hand it over to Penny.

But I digress. Regarding the bill the member for Wakefield has spoken on—the Fair Entitlements Guarantee Bill 2012—I support the member for Farrer in saying that we will be moving a second reading amendment, which I will refer to later. There were many points on which I agree with the member for Wakefield, particularly relating to the actions some companies take towards the end, when they are clearly heading in the direction of not being able to survive. I think that has been shameful at times in our history.

I refer to a good example in late 2006 where a certain components company based in Sydney, with some South Australian ownership, treated their workers in a terrible way—which I think even today, interestingly, would still be a difficult issue for any government to deal with if an employer took such an attitude towards a certain company. I remember that a certain Sydney talkback host jumped on that issue and made great hay with it. But, truth be told, when an employer wants to act in that manner, it can treat people terribly. I think that is a very good point that the member makes. Equally, there are times when employers and directors make bad decisions or deliberately make decisions which seek to unfairly treat their workers. That is why we need protections in law in this country: to ensure that people are not unfairly treated. We do need a safety net, and we have always supported—I have always supported—the need for a strong safety net of entitlements for people in the workplace.

But what the member for Wakefield did not refer to, of course, is that there are times when organised labour and workers' representatives also make mistakes and also push too far in making companies pay for entitlements which are clearly beyond the capacity of certain companies to pay for into the future. They are unsustainable, and that equally leads to the unfortunate circumstances where companies cannot continue to operate and therefore go out of business. You have to wonder sometimes whether cutting your own throat is a good idea, and that certainly has been the case with many companies.

Equally, right now, today, as we speak, there are companies—including one big company that operates in the northern suburbs of Adelaide, in the member for Wakefield's electorate—who have agreed to arrangements which are very generous. When those companies are the beneficiaries of significant taxpayer support in the first place, you have to wonder whether these companies and these workers—

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Come down to the factory.

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

Of course the union tells its workers that this is a terrific idea, but at the end of the day, if it makes it harder for these companies to survive in a difficult time—when the dollar is undoubtedly putting pressure on manufacturing and when heavy manufacturing in Australia is suffering—and if heavy manufacturing plants agree to over-the-top, over-the-tote wages and send around letters claiming that the wages and conditions are not over the top and not over the tote odds, you do have to wonder if they are operating in their best interests. Of course, what that will lead to from time to time is companies going out of business.

What happened when the Howard government was in power—it was in 1999, I believe, when the first iteration of the GEERS scheme was put in place—was that the state Labor governments in particular and, in truth, federal Labor had failed to put in place protections for redundancy payments and certain entitlements over their years in power. This was reasonably non-controversial at the time of introduction, in the sense that there were some companies that went out of business leaving employees without their entitlements, and the Howard government moved to address that. But it became much more stressful and difficult and much more relevant on 12 September 2001, when Ansett went out of business. This is another example where, through both management decisions and overly generous employment conditions, the company could not survive. With changes occurring in the aviation industry, what happened was that the build-up of that pressure put that company under such stress that thousands of Australians lost their jobs, and many still campaign today for what they believe are their rightful entitlements, which they have not received from administrators and the like. The Howard government moved very quickly. Of course, at that time there were other international events which had people concerned about what was going on, and the Howard government reassured people, moved quickly and created the GEERS scheme, which they then built on immediately post the Ansett crisis and which assisted those workers at a time of great need.

The establishment of that scheme basically ensured that workers, in the circumstances in which they met the criteria, could be guaranteed redundancy payments that met relevant community standards. What that sought to do is, where organised labour, company directors, CEOs or owners of businesses made bad or inappropriate decisions and overly inflated certain entitlements, particularly in relation to redundancy, the taxpayer, while ensuring a safety net, was not going to be put on the hook for amounts that are far above community expectations. The member for Wakefield referred to certain high end employers whose shareholders agree to their packages of employment. They do not get picked up by the taxpayer in the event that the companies go broke, and nor should they be. I also note that he did not refer to certain other companies when he referred to high end employers.

What the member for Wakefield failed to mention is that what the government is doing here is trying to increase by stealth, in effect, the acceptable community standard for redundancy payments. From my years in industrial relations—about 15—four weeks per year has never been the community standard. It has always been capped. In fact, 16 weeks is at the high end or the generous level of the cap. By putting forward a bill in which you are changing the arrangements of the GEERS program in the first place and in which you are extending by stealth what the acceptable community standard the government is trying to establish a new benchmark and put pressure on Australian businesses to meet that.

The argument that will flow from unions in negotiations will be, 'If it's good enough for the government and if the government can guarantee this amount, so should you, Mr Employer.' This will flow down the employment food chain from big businesses, which will have to meet these new standards—and I am sure that in some circumstances they already have arrangements that are not dissimilar—all the way down to the smallest businesses, which cannot carry these new entitlements.

In the next 12 months, we will unfortunately see people lose their jobs. There is structural change going on in the company. We hear that constantly from the government and that point is right. We will also see very quickly a lot of smaller businesses signing up to agreements so that they do not have disputation in their workplace. There is now Fair Work legislation that makes it impossible for them to stand up to union bullying. They will agree to these arrangements. They will have to make changes to their businesses and they will be stuck with redundancy payments that they cannot possibly pay. What you will have is this perverse effect where more companies will be forced out the back door, to use a famous saying of a former Prime Minister in this place. That will be the outcome of this move by the government to uncap this entitlement. It will be unaffordable for many businesses. Pressure will be put on them through industrial negotiations to sign up.

We know, because business leader after business leader have told us, that these industrial negotiations are now skewed very much to organised labour rather than to the interests of employees, of businesses and of our economy. That is why we object and that is why we are moving, as the member for Farrar outlined, a reasonable amendment to improve this bill. That amendment will cap that amount at 16 weeks of pay. We believe that that is the acceptable community standard. People in the community would agree with that. But equally the taxpayer has to pick up these tabs. As the member for Wakefield said and as I remarked at the beginning of this contribution, there are many circumstances in which businesses go insolvent.

Some of them, many of them, are when company directors and businesses have made the wrong decisions about their business, undoubtedly. Equally I agree with the member for Wakefield that sometimes businesses handle those circumstances horrifically and do not treat their workers properly and that there should be some protection in the system for people, their families and their livelihoods. I think that is a perfectly reasonable position. That was the position that the Howard government adopted in 2001, and then built upon in the years following.

But what this bill does is unfairly put the taxpayer on the hook for entitlements which are far beyond community expectation. That is where we object and that is why we are moving to assist the government in improving this piece of legislation. While the Howard government were the authors, the designers and the people behind this move, and while the coalition support very much the strengthening of these provisions with the conditions that we have talked about, ensuring that there are conditions on how this money is accessed and that the normal insolvency provisions are followed, people should not expect that the government will pick up unreasonable entitlements.

Mr Deputy Speaker Symon, you know industrial relations well. You have been involved in industrial relations for many years and you know how this works. When there is a new entitlement in the system it flows through, like water flows down a drainpipe, because that is exactly how unions seek to get higher conditions in employment agreements. They start at the top, with the bigger guys who can usually afford it—not always, but most usually—and usually with the public sector. They move on to bigger employers and then it trickles down, right through to smaller businesses that often cannot pay the same generous entitlements that bigger companies do. If they do not meet those challenges, if they do not meet those set standards—and, of course, this is one of the great faults of the old tripartite system—they end up being put on the hook for conditions they cannot meet, even though employees have an expectation that they will meet them because the employer has signed an agreement with them under the pressure of organised labour.

We support the direction of this bill, and we have said that very clearly. But we do not support the uncapping of this entitlement. We say put a reasonable limit on it—a number of weeks' pay to a maximum of 16 weeks. I cannot see how anyone, particularly with experience in this field, could object to that—anyone who wants to protect the taxpayer from unreasonable amounts signed up by companies, sometimes under pressure, sometimes with agreements that are far outside community expectations and sometimes where people have acted inappropriately. Whatever the circumstances of the business going down, the taxpayer should not be required to pick up that fault at this level.

Unfortunately, the bill is badly thought through, and that is why we are trying to assist the government to fix it. We hope that the government will adopt this amendment, which is reasonable, to ensure that a good idea put in place by the Howard government is strengthened even further so that Australian families can have surety that their entitlements, in the event that their company goes broke, will still be there.

Gai Brodtmann (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to hear from the member for Mayo that there should be protections for employees because that is what the Fair Entitlements Guarantee Bill 2012 is all about. He harked back to the glory days of the Howard government, and I was reminded of what the Howard government did to Canberra and to the Public Service. It contrasts very dramatically with what the Gillard government is doing for the Public Service and its support for the Australian Public Service and for Australian workers. As the member for Canberra, which is an electorate with thousands and thousands of public servants, I have been a strident supporter of the Public Service for years, having been a former public servant for 10 years before I set up my own microbusiness, and I am a strident and strong supporter of the public sector in general.

The Gillard government has ensured that we have a stable public service and that we continue to build a stable public service.

We are always working towards making sure the Public Service is resourced to tackle current and future challenges and at the same time we are always looking to remove inefficiencies where they exist. We have been doing that since 2007, tackling a range of areas where we can drive greater efficiency in the Public Service, and we have recently done that with the recent announcements on travel and publications a range of other measures. So we are constantly looking for improvements in the Public Service and greater efficiencies at the same time as trying to ensure that we have a stable Public Service.

My passionate and strong advocacy for Canberra and for the Public Service is well known and well documented in this House, as is my support for small- and micro-business sector that work with and support the Public Service. I would like to use this opportunity to draw to the House's attention the fact that this evening my colleague the Minister for Small Business and I, as well as the shadow minister, will be launching the Parliamentary Friends for Small Business. It is the first time an organisation like this has been established. We are very much looking forward to the launch of that initiative. It was an initiative that I discussed with the former Minister for Small Business early on in my term and I am really pleased that we are finally getting it off the ground tonight. A am looking forward to all parties continuing to engage with small and micro businesses on their concerns to ensure that they are heard in the policy arena.

The reasons that members like me need to defend the Public Service and workers and to stand up legislation like this bill is because they are constantly under threat and attack by those opposite. The member for Mayo reminded us of what the Howard government did in terms of workers entitlements. It reminded me again of what he did in Canberra and also throughout Australia to the Australian Public Service. Those opposite are constantly criticising the Public Service. They are constantly criticising the value and the worth of the people who work in it. As a Canberran I have lived through the boom-and-bust mentality of those opposite and I know how damaging their policies can be.

I was one of the 30,000 Australians who lost their Public Service job when the Howard government was in power and they took the cleaver to the public sector. I was at that time posted to India and after only being there for four months I was told that my position had been abolished. I was asked to stay on for the year so that I could take part in a major integrated country promotion of all Australia's achievements in the nation. But then I was brought back here and basically had to reapply for my job. There were 50 of us in my cohort of workers in the public diplomacy sector before I left the shores of Australia for India. When I reapplied for my job in Australia there were only eight left. At the same time my now husband had resigned his job from the Canberra Time. We came back and did a bit of part-time work. The knock-on effects of Public Service job losses is not just by the individual but also by the spouses who may not be able to get employment themselves and also by their families and also the broader community.

I remember when I was in DFAT I came back to farewells being held in bulk. That is the legacy of the Howard government in terms of the Public Service. In that time, as I mentioned, 30,000 jobs nationally were lost. Over five years there was a decline in the Commonwealth Public Service here in the ACT of nearly 16,000 permanent jobs—15,800 to be exact. As I mentioned, it is not just the Public Service that feels the impact of that; here in Canberra every small business paid the price of the axe that was taken to the Public Service jobs. Many local shops were empty or only half full and house prices plummeted. The growth industry was removalists. People left town—our population dropped dramatically. It took us many years to rebuild in terms of an economy and in terms of growth.

It was the workers who lost out, workers who lost their entitlements as well as their income. As I said, it was not just public servants who experienced this; it was also businesses. Both business and non-business bankruptcies at that time jumped sharply as a result of the cleaver that was taken to the public sector.

I would just like to remind the House that the budget surplus that the Gillard government are committed to is designed to protect us against any further global economic turmoil and, however difficult this task will be, I know that the Gillard government will always seek to protect jobs and grow jobs, as we have—800,000 jobs, in fact—which is in stark contrast to those opposite, who proudly boast about Canberra-bashing and demonising the Public Service. The introduction of this bill will benefit a range of sectors—and it is not just in Canberra that this will be felt; it will be felt right throughout the nation—and it will have a significant impact on employee benefits.

I want to run through the details of the bill in terms of what it is actually designed to achieve. It will establish a basis for advancing unpaid employee entitlements so that eligible employees who lose their jobs and are owed entitlements are actually paid those entitlements when their employer is insolvent. Replacing the General Employee Entitlements and Redundancy Scheme, it will allow the Commonwealth to provide financial assistance in the form of an advance to cover certain unpaid employee entitlements when the end of the person's employment is linked to the insolvency of their employer. After an advance is made, the Commonwealth will assume the individual's right to recover the amounts advanced through the winding-up or bankruptcy of the employer.

Eligible employees will be covered for the following unpaid employment entitlements: wages of up to 13 weeks; redundancy pay, which will be capped at a maximum of four weeks pay per year of service; payment in lieu of notice, which will be capped at five weeks; annual leave; and long service leave. The key changes that this bill establishes include removing eligibility requirements associated with deed-of-company arrangements and mirroring bankruptcy arrangements; extending eligibility for entitlements that crystallise after the appointment of an insolvency practitioner, which is essentially to cover that portion of the entitlement that the insolvency practitioner is not obliged to pay; simplifying transfer-of-business rules, with effect from 1 July 2014; and removing the discretion to accept claims that are not made within 12 months of the end of a person's employment or the appointment of an insolvency practitioner.

The bill also includes arrangements for ministerial and/or departmental discretion to be used in a number of specific non-routine circumstances where the act of discretion supports the objects of the bill. These amendments are designed to address minor technical faults.

Clauses 12 and 25 of the bill refer to exclusions for changes in terms and conditions in the six months before the insolvency event; and, following the introduction of the bill, the department has re-examined these provisions and advised that the current drafting is not sufficiently wide enough to capture redundancy and payment in lieu of notice, as these are contingent liabilities that arise only on termination of employment. So the department has recommended that these provisions be amended to correctly reflect the intent that redundancy and payment in lieu of notice are captured.

I have highlighted some of the Gillard government's commitments to the Public Service and also to jobs but I also want to remind the House of the commitments to employee fairness that have been the tradition of Labor since its inception, since the beginning of the party. That is the reason we were established: to protect workers rights and conditions. I was reminded, when looking at this bill today, of work that I did in the Attorney-General's Department in the early part of my career, where the Labor government established the Insolvency and Trustee Service. It was the first service established to actually address bankruptcies and ensure that there was some legislation, and an agency, introduced to ensure that workers rights and entitlements were protected. Prior to that, we had seen what happened in the late eighties. There were a number of businesses that went bankrupt where the company director essentially left the country, in many cases with huge swags of money, leaving employees with nothing.

They were left with no pay, no entitlements, no conditions—nothing. So the initiatives and the legislation that we introduced, and it was the first such legislation for the nation at that time thanks to Labor, were designed to ensure that there were some protections for workers. As we know, these things change over time and we become more aware of gaps in legislation and it is good to see that we are constantly updating legislation to ensure that we are constantly looking out for workers and looking after workers to protect their rights and entitlements.

I commend this bill to the House. I believe it exemplifies all the best that is Labor and all that is good about Labor. The reason I joined the Labor Party is that it is all about workers' fair rights, workers' entitlements and ensuring that they are protected when the company or organisation that they work for goes belly up, becomes insolvent. It is unfair for workers to be exposed. Quite often it is not about an inadequate board of directors. Quite often it is about the circumstances and a business can no longer be solvent. But workers should not have to pay for bad economic circumstances or bad decisions by the board of directors. They should receive their fair share of entitlements and conditions, and that is what this bill addresses.

I want to come back to the Public Service and remind Canberrans of 1996, when the Howard government was in power, and remind them of the fact that at that stage there were 30,000 Public Service jobs lost in Australia, nearly 16,000 of them here in Canberra. House prices plummeted, local shops closed down and removalists found theirs was a growing industry as people left town. It took us a long time to recover from that.

I draw the House's attention and also Canberrans' attention to the comments made by those opposite about their desire to get rid of 20,000 public servants. I ask them to consider what that will mean for the Canberra and also the Australia of the next decade. Do we want to go back to 1996 when we did experience that slump in the local economy? It was not just about the local economy here in Canberra as it did have a significant knock-on effect throughout the region of Eden-Monaro and throughout the capital region of Canberra. If you went down to the South Coast you saw three out of four houses up for sale. Again, it had a knock-on effect all around here in terms of the farms and properties around this region and it had a knock-on effect for Queanbeyan. So it just does not affect the public sector here in Canberra; it affects hundreds of thousands of jobs throughout the region. I remind Canberrans to remember 1996 and reflect on the potential for 20,000 job losses.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

I appreciate the opportunity, in this short period over the next seven minutes before question time begins, to speak on the Fair Entitlements Guarantee Bill 2012. Clearly, this debate is fairly wide-ranging given some of the comments that have been made. I have just heard the member for Canberra talk about what happened in 1996. I think I should remind Canberrans of what happens when a house is left in disorder, when a government has led the country to live beyond its means and racked up $96 billion in debt. Someone needs to then come in and clean up the mess and I think it is not right for the team that left the mess to then blame the next team that comes in for the cleaning up of the mess. Whilst members from Queensland might be complaining about the things that take place in Queensland under the new government, the trouble is that when the last Queensland government left the place stayed in a mess with huge amounts of debt and someone needed to make the hard decisions.

The hard decisions had not been made for a long time. Largesse in government spending had taken place over many years in Queensland and someone needed to come in and do something about it. The reality is that the country now faces $257 billion of debt, thanks to those opposite. They have taken us from a net asset position of some $70 billion and now we are $257 billion in the red. Someone needs to clean up the mess.

We welcome the opportunity to speak about the Fair Entitlements Guarantee Bill 2012. This is an evolution from the previous legislation that applied, the General Employee Entitlements and Redundancy Scheme. The current Leader of the Opposition, the Hon. Tony Abbott, who was the workplace relations minister in 2001, established that scheme. It was to protect the employee entitlements of more than 90 per cent of workers who lose their entitlements when their company becomes insolvent.

Obviously there are circumstances in this country where certain companies might run into difficulties. A lot of companies in this country now face difficulties. There are a lot of businesses out there whose confidence has been sapped by this current government and now they are facing all sorts of problems. Every day in question time we raise the plight of these companies, and the government dismisses us and dismisses the interests of these businesses. It is not right. Thanks to the lack of confidence that this government has created across so many states, even in Western Australia now, we need to look at this Fair Entitlements Guarantee Bill. That is the problem that this country faces. Hopefully, after the next election there will be a greater degree of confidence and this country will start being able to move forward again.

The coalition will move an amendment to this bill to include a cap on the redundancy payment at 13 weeks. That is the right and appropriate thing to do, given that that is in line with Labor's very own Fair Work Act. The coalition was always very careful with the GEERS, the General Employee Entitlements and Redundancy Scheme, to ensure that the scheme kept in line with the community standard. The amendment that we propose would ensure that the standard—the high bar—of Labor's own Fair Work Act is maintained. We acknowledge the importance of looking after workers and making sure that, in circumstances in which businesses go under, something is done about entitlements and people are looked after. The eligibility requirements for these entitlements are that the person's employment has ended, the end of the employment is linked to the insolvency of the employer, the employer is in liquidation or bankruptcy, and the person has unpaid employment entitlements that cannot be obtained from another source.

We acknowledge that this needs to take place. This was the side that actually initiated this action when it needed to be done. The person that initiated it was the Leader of the Opposition, looking after people that needed to be looked after when the pressure was on, back in 2001. In this place, we are used to hearing how we are responsible for all the dramas in this country—that, when there is someone to blame, it is always us. But, back in 1996, when one side left this country in disorder, someone needed to clean up the mess. Now we face exactly the same circumstances, where one side is leaving this country in disorder—$257 billion of gross debt—and someone needs to come in and fix it up. I hope that, when the time comes, not only the rest of the country but Canberrans as well will remember that, when someone takes responsibility, this country can be brought back into order.

I appreciate the opportunity today to make comments on this bill. I completely endorse the amendment that will be brought forward to include a cap on the redundancy payment at 13 weeks. That will be in line with the government's own Fair Work legislation that they always stand by so completely. In any case, I look forward to the government considering what needs to be done and making sure that our amendment is fully accepted, because that is the best way to progress this matter.

Debate interrupted.