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

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

Hume.

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

Sorry, Hume; my apologies. Good on the member for Hume for being the only government member so far on the speakers list—

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Don't push it!

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

Great. Now we are going to have his colleague from Queensland get up as well. I want as many government members speaking on this as possible. I want their comments and defence of this bill on the record so when the thousands of workers start losing their jobs as a result of Joe Hockey and this government turning their backs on the car industry we can say: 'If you want to understand why you are not receiving a decent benefit, even after working 40 years in a workplace, you can thank the Prime Minister, the Minister for Employment, Senator Abetz, and all the other frontbenchers.' But who is here to defend them? A backbencher has decided to defend them. There are no frontbenchers defending this. I cannot wait to hear Minister Abetz's defence of this, because it is reprehensible. It is a breach of faith. It is contradicting the promises made before the election. It is attacking the needs of workers who are going to struggle if this legislation is passed.

I ask the government to rethink its position. The intersection between what is happening in the car industry and other industries because our economy is in transition—and we know that there are challenges—is the perfect storm and is going to mean that people will drown economically as a result. I assert that the government should rethink its position because the bill is harsh, it is in contradiction to the government's commitments before the election and it is going to hurt older Australians most of all—not just older Australians but many who have worked 40 years building the company, building the community and building this country. I seek leave to table the letter from Minister Abetz to Mr Rault confirming that there would be no changes to these entitlements.

Leave not granted.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Fair Entitlements Guarantee Amendment Bill 2014. I am pleased to do so because this bill is critical for the sustainability of an important program in a budget environment where every dollar must be targeted for maximum impact after the spendathon of the previous government. Under the Fair Entitlements Guarantee, the FEG scheme, the government covers unpaid entitlements to eligible employees who lose their jobs due to liquidation or insolvency of their employer. We should note that the predecessor scheme—the General Employee Entitlements and Redundancy Scheme or GEERS—was established by the Howard government in 2001. I know many members of this government in this parliament are proud of having established that incredibly important program that we continue to support today.

These are intended to be safety net schemes of last resort covering some entitlements. That is how they were established and that is how they continue. Neither scheme was designed to cover all entitlements, despite what we heard from the member for Gorton. As it currently stands, FEG provides assistance for up to 13 weeks of unpaid wages, annual leave, long service leave, payment in lieu of notice to a maximum of five weeks and redundancy pay to a maximum of four weeks per full year of service. So there are caps in place and there will continue to be caps in place because this program must be sustainable given its importance.

The rationale for the scheme is very clear. We know that secured lenders and even large unsecured lenders have the resources and ability to make informed decisions when they take on credit risks. They are able to better manage those risks by diversifying and even avoiding the risks in the first place and they are able to absorb the risks if they come out the wrong way. In the case of employees the situation is much more difficult. They do not have the resources and skills to assess risks. It is much more difficult to manage those risks, even if they can assess them in the first place, and losses to most employees are more dire—often they will lose all of their income over an extended period of time. So for this reason we put the scheme in place. We continue to support the FEG scheme, but we need to make changes to ensure that it continues to operate.

In my electorate of Hume this program has been critical in recent times. The steel manufacturer National Engineering based in Young went into voluntary administration on 28 October last year, leaving some 38 employees without a job. Subsequently, the company moved into liquidation on 3 December in the same year. For a while it looked as though employees would not get their entitlements before Christmas, and it was a stressful time for staff and their families, but with excellent support from the office of the Minister for Employment and liaison between the Department of Employment and the insolvency practitioner over the period of administration we succeeded. More than $550,000 was approved under the FEG for unpaid wages, annual leave, long service leave, payment in lieu of notice and redundancy pay. Payments were received by Christmas for the employees who lodged claims. It is absolutely critical for my electorate and many others that this program be sustainable.

The bill in front of the House will give effect to the 2014-15 budget measure to protect the financial sustainability of the scheme. Instead of allowing a maximum of four weeks per full year of service, it will restore the previous cap on redundancy pay entitlements to 16 weeks of pay, which applied prior to 2012 and worked extremely well and extremely effectively for the 11 years it had already been in place under the previous Howard government and the Rudd and Gillard governments. The measure will save almost $80 million over the forward estimates by capping the redundancy payments. The FEG Amendment Bill impacts on the redundancy pay entitlement only. All other entitlements are absolutely untouched. It is important to note—and I will talk about this a little more later—capping the entitlement to 16 weeks will bring the redundancy entitlement in line with the National Employment Standards contained in the Fair Work Act and the rules that existed under GEERS prior to 2012, as I said a moment ago.

The bill also makes a series of technical amendments. The technical amendments are not controversial and can be considered housekeeping. I noticed that the member for Gorton did not raise any of these amendments in his speech. They are being introduced at the suggestion of the Department of Employment in order to clarify the operation of the act. They include establishing a funding source in the legislation for certain legal costs associated with the AAT appeals against FEG decisions; clarifying that the death of a person does not prevent the person being eligible for an advance—of course, the member for Gorton did not mention this one, which is of great benefit to employees in difficult situations—enabling the next of kin or the state to pursue a claim; clarifying that when a debt owed by claimant to his or her employee is greater than the entitlement, it can be offset against any of the claimants other employment entitlements under the scheme; and removing the eligibility requirement that a person who has owed debts prior to the insolvency event happening to their employer must have taken reasonable steps to be paid those debts. But, importantly, the legislation only allows the secretary to reduce a person's entitlement by the amount of any debts that he or she did not take reasonable steps to be paid. At the moment, if they do not take those steps, then in fact they lose all of their entitlements. So all of these are important amendments largely in favour of the employee or former employee.

Let me just spend a moment on why it is so important that we pass this bill. Of course, at the top of the list is the need for fiscal sustainability across all our programs, something that those on the other side of the House seem to still be in denial about, to still ignore in their claim that every bit of spending should remain. There are two critical but distinct parts of the government's focus on fiscal sustainability. Firstly, of course, is getting the budget back to surplus over the forward estimates, made more challenging by the serious economic headwinds we face—a falloff in the terms of trade and mining investment, falling company tax revenues, and the end of the consumption boom driving GST revenues, none of which those opposite seem to take into account in their thinking about how they would spend money if they were in government and how they spent money when they were in government.

Secondly, but as importantly, we need to ensure that we have a long-term sustainability in our budget. The Parliamentary Budget Office tells us that under the last government spending was rising at 3.8 per cent a year and yet we can expect revenue to only rise at something like three per cent. You do not have to be the world's greatest mathematician to work out that this is a serious problem. This is a fiscal cliff and we are going over it and if we do not deal with it one of two things must happen. One we have a massive tax hike—massive. Right now we have tax at about 23 per cent of GDP. If we were to allow this to continue, a simple two line spreadsheet will tell you that within a short period of time federal tax will have to rise to 30 per cent of GDP. Go tell that to your employees, your constituents, your taxpayers. Those on the other side of the House seemed to have no regard for the future taxpayers of this country.

Of course, one of the great disappointments about the way the PBO works at the moment is that it does not demand the opposition put its estimates, put its spending promises beyond the forward estimates, out for scrutiny. That is something that desperately needs to be changed. The spending promises of the last Labor government—and no doubt the opposition, as we move before the next election—beyond the forward estimates are not subject to scrutiny and absolutely should be, because we need to make it absolutely crystal clear which side of the parliament is ensuring that future taxpayers do not have to wear the profligate spending of those on the side of the House.

To keep the FEG scheme viable, it is clear that we need to make changes. It has grown absolutely dramatically, with demand increasing from 8,626 claimants being paid $73 million in 2006-07, a very sustainable number, to 16,019 claimants being paid $262 million, almost 3½ times what it was six years earlier, in 2012-13. This increase is absolutely unsustainable. It is exactly the sort of increase we see from those opposite in so many of the programs that they oversaw, and in this case they enshrined in legislation. From a budgetary point of view the current four weeks redundancy paid for each year is no longer sustainable and setting the entitlements to 16 weeks in total is fiscally responsible.

It is important to note that, as I mentioned earlier, capping the redundancy payment will bring the FEG in line with Labor's National Employment Standards and the Fair Work Act of 2009. The current redundancy benefit under FEG provides for four weeks' pay for every year of service. We know that that is well above the standard set in the National Employment Standards outlined in the Fair Work Act. In fact, Labor has told us that the National Employment Standards in that act got the balance right and sets a community standard. Yet they are not prepared to support it in this legislation. The hypocrisy we see continually from those opposite is awe inspiring, it is extraordinary. It is not good enough and that is why we are proposing this change, remembering that this is a scheme of last resort that should only cover redundancies that are in line with the community standard. It should be noted that the scheme already has a cap on maximum wages of $127,000 per annum. So there are caps everywhere already in this scheme. That reflects the intent of the scheme that more generous remuneration above community standards should not be covered by a safety net scheme.

We have heard many in the community supporting this cap. The AiG said:

The 16 week cap mirrors the entitlement to redundancy under the National Employment Standards and hence reflects community standards ...

The Master Builders Association submitted similar things to the Senate inquiry on the issue and said that the general redundancy standard put in place by Labor was out of step with the general community standard and suggested that the proposed cap be brought in line with the community standard. Both the Ai Group and ACCI said that a publicly funded safety net scheme is necessary to protect workers as employers went bankrupt but they both stressed that it should offer an appropriate level of protection. It is also important to note this bill only impacts a small proportion of claimants. It turns out that historically, over the three-year period, there were 41,393 claimants on this scheme and this change will only affect 2,446, or six per cent. The vast majority of claimants would be totally unaffected and those claimants who are affected will only be affected in a relatively small way, in the vast majority of cases.

As I said earlier, the bill only affects the redundancy entitlement and all other entitlements are unchanged. It is important also to note the bill removes a moral hazard—the sort of moral hazard those opposite seem to like. The thing as it stands creates a moral hazard whereby unions, company directors, CEOs or business owners can inflate redundancy entitlements when companies are in trouble and the taxpayer will pick up the tab when the company goes broke. It is not the sort of moral hazard the Australian people would find acceptable. The Ai Group discussed this fact and said there are major moral hazards present in the current legislative provisions, because there is little protection against employers being coerced by unions into implementing extremely generous redundancy packages in the lead up to insolvency, leaving taxpayers picking up the tab. We had similar comments from ACCI, which said:

What I am saying is that the potential arises in the dynamic it introduces into negotiations. It is one thing for two parties to sit down and negotiate terms and conditions, but if they know at the back of their minds that ultimately the government will pick up this entitlement our proposition is that that will impact on the bargaining dynamic.

The sustainability of well-directed and high-quality government programs is the focus of this government and should be the focus of future governments of Australia. This bill is intended to do exactly that. This is an important program and losing it, and others like it, because of unsustainable growth in spending is totally unacceptable. I commend this bill to the House.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to speak on the Fair Entitlements Guarantee Amendment Bill 2014 but, unlike the previous speaker, I oppose this bill. I oppose the amendments to the Fair Entitlements Guarantee Act of 2012 and what this bill seeks to do.

The Fair Entitlements Guarantee is a legislative safety net. It is there to protect workers who, through no fault of their own, lose their jobs through the bankruptcy or liquidation of companies. The Fair Entitlements Guarantee is a scheme designed to ensure fairness for working people. One of the things I have a degree of understanding of, having an electorate with a very high degree of unemployment and also having family members who have lost their jobs principally through the liquidation of the company, is how this impacts on families. I know how a family member can go to work only to be told with no notice that there is no further job, that for financial reasons liquidation is necessary: 'Please remove all your belongings, files and any other personal effects and exit the premises.' That happened to my son. I know how devastating it was for him and his family. They had a mortgage and school fees to pay. It had an absolutely huge impact. If you multiply that electorate wide, it is easy to understand the importance of having safety-net legislation.

Members opposite, cast your minds back. We did not always have a safety net. Remember, back in the year 2000, there was the unfortunate and unexpected liquidation of a particular company called National Textiles. The then Prime Minister's brother happened to be on the board of directors of that company. As a consequence of this, and to the considerable embarrassment of the other side, the General Employee Entitlement Redundancy Scheme, the GEERS legislation, came into effect in 2001. Whether it due to embarrassment or simply feeling it was the right thing to do, it was under the circumstances the right thing to do—not because it was the Prime Minister's brother's company, but because this was one company among many which took the soft way out and liquidated for corporate reasons. This is not something we should be shying away from. It is certainly not, as the previous speaker said, that sometimes these entitlements are so inflated that it amounts to corporate spending. This is about trying to do something for people's lives when their company goes into bankruptcy or, more than likely, into liquidation. That is certainly no fault of the employees.

This is an important bill the government is bringing forward because it seeks to undermine the very basis upon which we are trying to protect the entitlements of those employees. The bill will impose caps in terms of payments of entitlements; these will be capped at 16 weeks. The other significant part of this bill will ensure that, as opposed to getting paid at your average rate of pay, you will be paid at the level of average weekly earnings. That is a vastly different figure. I understand the speaker opposite, the member for Hume, said it is possible for some people who are earning $100,000 to receive this payment. Yes, it is. It is not a matter of whether they contributed by negligence to bringing down the company; they lost their jobs like anybody else. To simply use the figure of average weekly earnings as the yardstick for this will have a huge impact on those people unfortunate enough to have to make a claim on this fund.

The bill will also progress three technical amendments that have already been spoken about. It will also amend issues as to whether a person has reasonably pursued the debt off an employer. It has provisions allowing the cost of appeals to the AAT to be drawn from special appropriations. But I cannot get away from the fact that, like many other pieces of legislation we are seeing at the moment coming from the government benches, this is actually going to undermine workers' entitlements. As I said, this is a legislative safety net, and what do they want to do? They want to wind it back. They want to make sure that you can only get a maximum of 16 weeks, as opposed to four weeks per year of service. They want to make sure that, as opposed to getting your real rate of pay, it is wound back to average weekly earnings.

It is extraordinary the lengths this government will go, I would not say to attack workers but certainly to undermine workers' conditions. I know that during the campaign leading up to the last election the government made it very clear that it was not their intention to move on Work Choices—at least not during the term of this government. But what we have seen is a never-ending pattern of going out and undermining workers' entitlements and workers' conditions. As the member for Hume said, people should not get used to being in an environment of spending. I agree with that. But is it only the workers who we are going to take the stick to when we want to curtail spending?

I was reading over the weekend about what is happening in corporate taxation. Gee, that is a first. The government certainly does not want to get too close to this body. I suspect that many of the companies that have been cited here are principal donors to the Liberal Party. This report, Who pays for our common wealth?, says that a third of Australia's largest companies pay less than 10c in the dollar in corporate tax. Ten cents in the dollar! That is a long way behind what they expect employees to pay. The report also found that 84 per cent of Australia's top 200 companies listed on the Australian stock exchange pay less than 30c in the dollar, which is the corporate tax rate.

On one hand, the government want to take every opportunity to wind back workers' conditions and to wind back protections that do nothing more than protect employees and their families—particularly in this case, where through no fault of their own a company goes into liquidation or bankruptcy. But, on the other hand, they certainly do not want to move with any great haste to do anything about corporate taxation. When you look at the top 200 companies, it works out that, if they paid the corporate taxation rate, the budget would gain $8.4 billion or more a year in revenue. That is almost the total savings that the government expects to make by slashing pensions, by bringing in the new GP tax and by cutting programs to Indigenous Australians. They certainly have their priorities very much skewed when it comes to this. I suspect there is a reason for it. They have a philosophical reason for winding back the entitlements for employees.

It is with regret that we find that we need to oppose this. I would have thought that those opposite would have had some regard for the whole concept emanating out of events such as the falling over of National Textiles, whether by embarrassment or otherwise. John Howard brought in the GEERS legislation back in 2001. Sure, that was a capped piece of legislation, but it was not restricted in terms of the earning rates. But they are simply winding back what we have now, what is provided under GEERS, to 16 weeks. They are also putting an extra imposition on, meaning that any worker who has not been able to gain their entitlements under a failed company going through liquidation or bankruptcy must make very attempt to pursue a company—which, unless workers have a trade union to go through, would be a litigious route and would probably be pretty expensive. The government is ensuring that those workers do not get payments based on their rate of pay but on average weekly earnings.

I will go back to where I started from: this is going to impact on lots and lots of people. I have the experience of seeing my own family go through a liquidation and a forced redundancy, with no knowledge of it occurring other than the fact of being escorted to a gate and being locked out, along with every other employee who lost their job. This has a devastating impact on families and family welfare, and it allows no opportunity for people to plan.

This is very, very retrograde. I am proud to be part of a party that saw fit in 2007 to bring about the fair entitlement guarantee legislation and I am proud of the fact that, since 2007, more than $852 million has been paid out of that scheme, to the benefit of 70,000 Australian workers and their families. I oppose this legislation. I think it is wrong in principle. I think it takes a stick to workers and their families at a time when what they need most is protection. This government has turned its back on them.

Stephen Jones (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

It is with great pleasure that I rise to speak on the Fair Entitlements Guarantee Amendment Bill 2014. This matter is one that is a passion of mine, for reasons that I will set out in a moment. I also understand that industrial relations is a passion of members of the government. However, it must be said that in this particular debate that it is a private passion—a very private passion, because there has only been one member of the government willing to come to the chamber today and defend their legislation. Indeed, if there were a standing order that said a government bill had to have a minimum number of government speakers who were willing to stand and speak in defence of it then I am quite certain that this legislation would not get out the gate.

Legislation—the business that a government brings before the House—is a statement of its values and a statement of its priorities. I would like to address some of the priorities and the values that are resplendent within this legislation. As the member for Fowler has just told the House, we are debating this legislation in the very same week that one of the most important reports, that goes to the heart of who is paying tax and who is not paying tax in this country, was published.

Readers of the Sydney Morning Herald woke with quite some alarm when they picked up the front page of the Sydney Morning Herald yesterday and saw that almost one-third of the nation's top 200 companies are paying less tax—in fact, they are paying less than 10c in the dollar—and that if you put end-to-end the amount of tax that has been evaded as a result of these deliberate decisions by some of the largest companies in the country, you would have an additional $80 billion in government revenue.

I ask you think about that for a moment, Mr Deputy Speaker, because we have a bill before the House today which finds its genesis in the Commission of Audit—the massive beat-up by the government to try to alarm the population that there was somehow a budget emergency. Hidden within the report was the proposition to wind back the provisions within the Fair Entitlements Guarantee Act to a bare minimum because we had a budget emergency.

Nowhere in the Commission of Audit did we find the commissioners drawing attention to the tax avoidance and tax evasion which has led to over $80 billion not finding its way into government coffers and not finding its way out of those coffers again into important public spending programs—roads, infrastructure, education, hospitals and important employee protection schemes such as those before the House today. Again, I make the point that the legislation before the House today is a statement of values and priorities. Instead of pursuing measures which would help the government buttress the problem that we all know is the problem, and that is a problem of revenue, they are going after basic entitlements.

This matter is one that is very close to my heart because before coming into the parliament I spent more than a little bit of time working in the area of insolvency and helping workers to chase down their entitlements that had been lost once a business went into liquidation. It was more than a little bit of time on them and in some quite high-profile matters indeed. So it is an important scheme. It is one that I have more than a little bit of knowledge of and I wish that those members opposite informed themselves a little bit more about the legislation that they are all going to career in here to vote in favour of—without having read it and without having spoken in favour of it, because that might change their minds.

We know that there are around 7,000 businesses which fail every year. About half of those businesses cause their employees to lose entitlements—entitlements such as long service leave, holiday and sick pay and redundancy payments—things that provisions have not been made for. We know that there have been around 885 business related bankruptcies cases in the June quarter alone. Total debtors exceeded 1,100 for the same period and between 2001 and 2013 more than $260 million had been advanced under the FEG scheme and its antecedents, the GEER scheme, to over 16,000 Australian workers. So, it is an important scheme. It deserves to have more attention than the House is currently affording it today by the fact that only members of the opposition are speaking on the legislation.

The history of this scheme is well known to many. Mr Deputy Speaker, you may recall that back in 2000 a company known as National Textiles—coincidentally, a company that was owned and operated by the then Prime Minister John Howard's brother, Stan Howard—went into liquidation owing around 340 employees accumulated entitlement, including redundancy pay. This group of employees were amongst the lucky ones. I should say that if anyone who is about to lose their job could be classified as 'lucky', here is a group of employees unfortunate enough to lose their jobs, but 100 per cent of their entitlements were paid eventually; not by the business but by the government moving in and underwriting the bills that were owed by the Prime Minister's brother. Many said at the time—many other employees who had lost their jobs—'If only we could have been so lucky as to have been working for a company that went bust and the owner of that company happened to be a Prime Minister's brother.'

Wind the clock forward to 2001 and to a company by the name of One.Tel. This time the collapse was not a relatively small textile company but probably the fourth-largest telecommunications company in the country at the time, stranding around two million customers and, importantly, owing something in the vicinity of $600 million to over 3,000 creditors. Included within those creditors were the 1,400 employees of One.Tel.

I know a lot about this because I was representing the employees at the time. I remember writing to the then minister for workplace relations, one Tony Abbott, and asking him to intercede on behalf of the workers in a matter that I had before the then Australian Industrial Relations Commission to get some justice for these workers. The then minister for workplace relations refused to do that. Of course a campaign then ensued, a campaign that was supported by the majority of right-thinking Australians, and the then minister for workplace relations got rolled by the then Prime Minister. It was the only occasion in my working life as a lawyer, practising in that particular practice, where I could say I was standing on the same side of the bar table as a member representing a coalition minister for workplace relations. It became clear to all that a general scheme was needed and, as the shadow minister for workplace relations has explained, an administrative scheme was set up, known as the GEER Scheme, and it paid a minimum entitlement to workers in the event that their company went bust and provision had not been made for their accumulated entitlements.

An important point to make, one which is lost on many, is that the payment of the minimum entitlements to the worker who has lost their job is not the end of the story. What happens is the right to pursue the assets of the company, the right to become a creditor of the company, is then assigned to the government. So the government, presumably through the auspices of the tax office or of the department of employment and workplace relations, is assigned the right to pursue those owed entitlements instead of the employee—a matter that is lost on many. And when you are looking to provide a revenue stream and you are looking to address issues such as moral hazard, I would argue that this is an important place to start looking—that is, putting more effort and more resources into the chasing of the assigned debt.

The scheme has been operating since then. It was improved under the former Labor government, to a point where the FEG Act now sets out maximum entitlements and how they are to be calculated. They include up to 13 weeks of unpaid wages, annual leave that has accrued but not been paid, long service leave, a maximum five weeks payment in lieu of notice, and redundancy pay of four weeks per year of service. It is important to make the point that these are not award or agreement rights themselves; these represent the caps or maximum entitlements that may be paid to an employee where they have been unable to recover those entitlements from a collapsed company. The wages were capped at a minimum weekly rate of $2,364 when the scheme began. It has been frozen at $2,451 until 30 June 2018.

You have to ask yourself who has benefited from this scheme. Because the courageous member for Hume has been willing to stand up and defend the scheme, has put his hand up, we know that at least 33 workers from the business National Engineering in his electorate benefited from the scheme. I congratulate the member for Hume for having the courage to come in here and stand up and defend his government's legislation. I warrant you that he would not have had the courage to give that same speech prior to the last election. He would not have been out there promising those 33 workers, 'If you vote for me, I can guarantee you that if your company goes bust you'll get less money under my government than you will under a Labor government.' He would not have given that speech. And I can also guarantee that of all the people that the member for Hume mails his courageous speech out to today, he will not be mailing it out to the 33 workers who had their benefits paid under the existing FEG scheme.

I happen to know a bit about the National Engineering company. It has been in existence for more than 120 years. It is a metalworking company, a blacksmithing company. And I know that its being a business, what was a reasonably good business, in a country town meant it was some of the best work going and that the people who got jobs there, if they were skilled tradesmen, hung on to those jobs; they would work there for a long, long time. So the member for Hume will not be mailing out his speech saying, 'If I had my chance, I would've been cutting your rights to get your wages recovered.' I guarantee he will not be doing that.

Who else has benefited from the scheme? If you have a look at the submission of the department to the Senate inquiry into this scheme you will see that more than 41 per cent of total redundancy payments made have been paid to employees in the manufacturing industry. But you have to ask yourself: why do the government hate workers in the manufacturing industry so much? What is it that they have got against workers in the manufacturing industry? I see the member for Wakefield in the chamber today. He has a keen interest in this issue. I see the member for Hotham in the chamber today; she also has a keen interest in this issue. They are members who have stood up in defence of the manufacturing industry in their electorates—as have the members for Blair and Hunter, who are also in the chamber today. They have been willing to stand up—in fact, one of the most passionate speeches I have heard by a member in this parliament, in the 44th Parliament, was the speech by the member for Wakefield imploring the government not to chase the automotive industry offshore.

So against that background, and knowing that the single biggest group of workers who have benefited under the FEG scheme—more than 41 per cent of workers have benefited—are workers in the manufacturing industry, you have to ask yourself: why does this government hate them so much? It chases their manufacturing jobs offshore and then, at the first opportunity it gets, it seeks to reduce their rights and entitlements and the benefits that could be payable to them under a scheme has worked for close to a decade. We should reject the bill. It is not fair, it is not right and we will be voting against it. (Time expired)

Bruce Scott (Maranoa, Deputy-Speaker) Share this | Link to this | Hansard source

Order! It being almost 1.30 pm, the debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.