Andrew Giles (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in opposition to the Fair Entitlements Guarantee Amendment Bill 2014. The purpose of the bill before us is to amend the Fair Entitlements Guarantee Act 2012 to reduce the maximum redundancy pay entitlement under the act. It removes a significant support and an important form of social insurance afforded to hardworking Australians: ensuring earnt entitlements are paid.

I was pleased to be in the chamber to hear the contribution of the member for Throsby, the previous speaker in this debate. He touched on the particular impact of this scheme on workers in the manufacturing sector. He asked the pertinent question: 'What is it about manufacturing in Australia that this government is so vehemently opposed to? Why does this government hate manufacturing workers?' The bill also makes some technical amendments to clarify the operation of the act. I note that the recommendation which apparently gave rise to this bill was contained in the work of the Commission of Audit, which shows the ideological foundation it rests upon.

Through the Fair Entitlements Guarantee the Commonwealth government assists workers whose employers have gone bankrupt or into liquidation by paying certain of their entitlements. The present act replaced the GEERS, the General Employee Entitlements and Redundancy Scheme, which had operated since 2001. The act sets out details of the maximum entitlements available and how they are to be calculated. There is presently no overall cap on the potential payment, but some individual entitlements are capped. The scheme pays moneys in respect of unpaid wages up to 13 weeks, annual leave, long service leave, payment in lieu of notice to a maximum of five weeks and also redundancy pay to a maximum of four weeks per full year of service. In addition, the level of wages to be paid is capped at a maximum weekly rate. This was $2,364 when the scheme began and has been indexed by movements in the average weekly ordinary time earnings. At present it is $2,451.50. This rate has now been frozen until 30 June 2018.

Government members in this place seem to like history, so I think it is worth going back to the last time when this parliament debated the bill. During the debate in 2012 the then opposition opposed the level of redundancy payment now included in the act on the grounds that it was higher than the community standard, that it would become a new community standard, that it was an extra imposition on employers and that it would eventually lead to a loss of jobs. In a confused speech, Senator Abetz described the former GEERS scheme as:

…a good scheme. It remains a good scheme and it is a scheme that provides protection for Australian workers who have earned and accrued entitlements. As a community, I believe it is appropriate to fund those entitlements in circumstances where people lose their jobs as a result of business failure.

Hear hear! I am surprised to find myself agreeing with Senator Abetz—to this point. However, the senator went on to describe Labor's changes as 'somewhat over-generous' and sought to move an amendment to cap entitlements. But more on the senator's contribution to this debate later.

Labor believes that the government simply has not made the case for the changes contained in this legislation and has instead relied upon a series of falsehoods and misrepresentations to walk away from its responsibilities—responsibilities to workers who deserve our support. I want to debunk some of the furphies used by the Minister for Education in his second reading speech to justify these changes—there is not time to deal with all of them. The minister claims that the current system:

… is very generous…it creates a moral hazard … it provides an incentive for employers and unions to sign up to unsustainable redundancy entitlements.

Really? I think the Bills Digest nails this bizarre rationale, saying:

It does not seem plausible either that employees would value highly a provision contingent on insolvency in the future.

It is pretty hard to disagree with the assessment of the Bills Digest. It stands in stark contrast to the assertion of the minister.

There is also the other side of this moral hazard argument, which, not surprisingly, does not play a role in the minister's consideration—namely, the employers. The Textile Clothing and Footwear Union of Australia, in their submission to the Senate Education and Employment Committee, noted that this moral hazard:

… lies not with groups of employees who enter into enterprise bargaining agreements in good faith but with employers (and their advisors) who:

•   Fail to operate their businesses in a professional and sustainable manner;

•   Who treat employees entitlements (including employee's superannuation) as an interest-free loan for their company;

•   Who fail to make proper provision for their employees' accrued and contingent entitlements; and

•   Who liquidate one company (to avoid debts) only to open up another the next day in a different name, at the same premises, with the same assets to perform the same work.

These are real issues that go to a moral hazard at the heart of how some businesses are operating in Australia. But here we see the government ignoring these concerns and essentially punishing workers for a business's sometimes deliberate and avoidable misfortune. Ironically, the bill before us may actually have the effect of increasing the moral hazard before us. The Bills Digest also notes that this bill:

… does not include the old cap on the rate of accrual, so that redundancy entitlements accruing at, say, eight weeks a year would be paid to someone who had worked for two years for a business that becomes insolvent. At the very least, the new provision, because of the removal of the maximum rate of accrual, could increase any moral hazard that exists.

These are words that the minister and government members should have serious regard to.

I now turn to the minister's assertion that some agreements are 'overly generous'. Surely this is a matter for employers and employees to decide in good faith at an enterprise level. Beyond that, I think it is telling that the minister has simply asserted this notion of excessive generosity in agreements without providing any substantiation. As with much of the work of the Commission of Audit, we see ideological assertions in place of evidence—a speciality this government has carried over from the Commission of Audit into much of its work.

I note that the Parliamentary Library has found that:

… in the same way that the maximum wage that is covered by the FEG, $2,451, is "generous", being 69 per cent above full-time adult average weekly ordinary time earnings of $1,454.22 … fewer than five per cent of employees earn that amount. These are maximum entitlements, so by definition they might be expected to be above the average.

So what the library is telling us is that these are not excessively generous provisions, they simply recognise seniority and experience; and, of course, they also recognise the contributions of the employers, direct as well as indirect.

I note that, in their submissions to the Senate Education and Employment Legislation Committee, neither the ACCI nor the AIG were able to give a specific example of where a generous entitlement could be linked to the FEG rules, and these stakeholders were, unsurprisingly, in favour of the legislation we are debating here. Like so many of the government's attacks on workers, it is all assertion and no substantiation. Take, for instance, the old canard that our existing industrial relation laws somehow impede our national productivity. It is repeated endlessly by members opposite and yet those making the claims are never able to substantiate their assertions—because they cannot. In this case surely an evidence based approach would be best and fairest. I ask members opposite to think about the impact on workers affected—the trauma of job loss, often long-term job loss, through no fault of their own, compounded by being short-changed in entitlements properly payable to them.

In respect to responsibility, the minister states:

… the government is firmly of the belief that it is the responsibility of employers to meet the cost of their employees. This includes making … provision for redundancy pay when employees are made redundant.

Again, so far so good from the minister, yet this bill makes no provision for enforcing this responsibility. This bill is in fact an exercise in walking away from responsibilities. Alternatives are open to achieve the stated aim of the minister but clearly he is not interested in fixing the real problem.

This bill sees the government's role as if it were to make a welfare payment, not provide a safety net or social insurance properly understood, as if money owed to employees by their employer were an optional extra. Workers in good faith sell their labour to their employer for an agreed price. It is the wages-work bargain. It is a pretty fundamental concept. This price includes entitlements. This again is hardly a new concept. It is also the law, even under this government. So I ask myself and members opposite: where are the government bills that seek to stop employers from walking away from their responsibilities to their employees? As the ACTU and Slater and Gordon, my former employer, note in their submissions, this government should be looking at more vigorous pursuit of rogue employers to achieve its desired savings. This would be the responsible thing to do. It might militate against a real, and not confected, moral hazard.

If, as the government claims—though again, it never even attempts to substantiate—the Fair Entitlements Guarantee is unsustainable, other options for reducing the cost, such as ranking employee entitlements above other creditors in an insolvency and improving the Australian Securities and Investments Commission's ability to enforce penalties for trading while insolvent, should be considered. These are real matters for consideration. Instead, the government simply notes the bad behaviour by some employers and does nothing to remedy the mischief.

Consistency is another issue that must be touched upon in respect of the minister's contribution to this debate. The minister makes the erroneous claim that this bill before us achieves consistency with the National Employment Standards by capping the entitlement at 16 weeks. Again I prefer the view of the Parliamentary Library to the assertion of this minister. The Parliamentary Library found the exact opposite. It is worth quoting at length. They state:

This is not accurate, as the entitlement to 16 weeks redundancy pay after nine years of service provided for in section 119 of the Fair Work Act 2009 is a minimum entitlement for that length of service, rather than a maximum, as section 61 of that Act makes clear. While there is a case for tying employment related, taxpayer funded benefits to minimum standards—for example, the current paid parental leave scheme pays the entitlement at the minimum wage—other elements of the FEG are not tied to minimums, and the case for doing so with redundancy payments has not been made.

By adopting a simple maximum entitlement expressed in weeks of pay, without the structure set out in the National Employment Standards, the amendment introduces a new anomaly. For example, an employee subject to an agreement which provides four weeks’ pay for each year of service will reach his or her 16 weeks entitlement after four years; an employee whose agreement follows the national minimum will reach his or her 16 weeks after nine years. This could result in a 25 year old employee and a 45 year old having the same entitlement.

This from a government and a minister who presume to lecture on moral hazards! Whatever word play amuses the minister—and we saw some of that in question time today—cannot avoid the facts of this debate. Government members need to grapple with the work of the Parliamentary Library and interrogate the assertions of the minister.

Of course, we are talking about morals. Another aspect of morality is keeping one's promises and yet this bill represents another broken promise from this government. Before the election, in a letter to a concerned citizen, the then shadow minister for employment and workplace relations, Senator Abetz, wrote:

It is a matter of regret that you have somehow been led to believe that the Coalition would abolish the 'entitlements guarantee' if elected … you can be assured that the Coalition would not seek to do anything that would water down these important protections for Australian workers … We have not flagged any changes to the slightly modified entitlements guarantee that currently exist.

Accordingly, you can be satisfied that there is no risk to your entitlements and I would invite you to pass a copy of this letter to all your fellow workmates …

Again in part I agree with what the senator has said and I certainly encourage the wide dissemination of this correspondence, particularly amongst those opposite, who I note have been backwards in coming forwards to participate in debate on this bill. We have seen only one coalition member backing the minister—and it was an unusual contribution from the member for Hume, to say the least.

I would be interested to know how the government reconciles this bill with the commitment made in Senator Abetz's correspondence. It is a matter the minister can take up when he makes his final contribution to this debate. I imagine the reconciliation would be much like the manner in which this government has walked away from its other promises by pretending they either were never made or are not broken. Indeed, we saw something of a master class in that regard from the minister in question time today. He said over and over again that white is black in terms of the cruel broken promises in his higher education portfolio. He failed to accept the plain facts, much less the real impact on people's lives.

I would like to think that all of us in this place want businesses in Australia to succeed and of course for their employees to be paid everything that they are owed. However, I think all of us here understand also the reality is that some employers go bust and that rogue employers do not make provisions for what they owe their workers. So we are faced with the choice of letting employees lose money owed to them or stepping in to prevent this injustice. As the Parliamentary Library has noted, the real impact of this is a substantial financial impact on a small number of people, so a substantial budgetary saving is being borne by a few people. This simply is not fair. This is a broken promise. It is a breach of faith with Australian workers. Labor does not and will not support this mean-spirited bill.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

Everyone remembers the tragic crimes that happened on September 11, 2001, when planes flew into buildings and for many of us the world, as we knew it, changed. I missed much of the aftermath of that, because back then I was working as a lawyer representing many workers around the country. What people may also remember is that a day or so after that Ansett, the airline, collapsed and the fleet was grounded. Several attempts were made at getting the airline back in the air but they were ultimately unsuccessful. My job was assisting those workers of the Ansett collapse to help them to seek and receive the entitlements to which they were owed. Everyone was desperately hopeful that the airline was going to be able to become a viable going concern again, but in the absence of that people wanted to know that, if they did not have a job, at least they were going to get the payments that they were entitled to.

Most people here and most people in Australia would think that, if you have worked for an employer for a long period of time—especially if you are an older worker and you might be thinking that this is potentially the last job you are going to have and after this you are going to retire—the entitlements that you are legally entitled to if your employer goes under and makes you redundant through no fault of your own is something that you can potentially bank on, especially if that is going to be your last job. And so it was the case for thousands of Ansett workers who had given, in some instances, a couple of decades of loyal service to the company. They were presuming: 'Well, okay, I've just lost my job through no fault of my own and I've been made redundant. At least I'm going to have a payout.' Of course, what we found very quickly was that the money was not there. The money was not there not because the workers had done anything wrong—they had done nothing more than give loyal service; the money was not there because of the way the airline had been run.

So all of a sudden someone who had stuck with a particular airline out of loyalty and in part because their agreement said, 'Look, if you stay with this rule period of time, you should know that there will be some support at the end of it if, through no fault of your own, you have to be made redundant,' woke up to the reality that the money was not going to be there. For people who had been in employment for 10 years or 20 years, for some of them that was several weeks a year pay that they were entitled to. So if you are 52- or 53-year-old worker who had been with Ansett for 20 years—been with any company for 20 years but in this case Ansett—and you got made redundant, at least you knew there was something there. But all of a sudden that had evaporated. So we had to work out how we were going to get these people the money to which they were legally entitled.

It took us and the union and the several other unions who were involved weeks and weeks at the time to get every individual worker signed up as a creditor and to then go and stand with the administrators and say: 'Well, we are all creditors. What are you going to do to get some money?' And then go to the Industrial Relations Commission, as it was then, and go off to court. And so the matter went on for years. What we found was that, even a decade later, some workers had not been paid their full entitlement. It took years and years and years to get the last bits of money out of what is left of the company. This was especially so when it came to superannuation. When I got elected in 2010, I got a phone call from a constituent who said: 'I'm still chasing superannuation from Ansett. When am I going to get it?'

That served as a bit of a wake-up call for the country—that we were not looking after people who got made redundant and found themselves without a job through no fault of their own. That was a very high-profile instance, but it has not happened only there. Many clothing companies and textile companies in Australia have faced over the last year the winds of international change, including decisions in this place about reducing tariffs. We have seen many companies that make carpet or that make other forms of textiles, clothing and footwear close down because they were no longer viable. What we found again was that workers who had worked there the longest and who may have had no other job and may have had limited English skills—and this may have been the only job they had since they got off the boat when they migrated to Australia many years ago—all of a sudden they too were without money that they had been banking on and presuming would get them through to retirement. Many of them got left without their full entitlement. This is not to mention the instances where dodgy companies would close down in November only to restart again in February so they could avoid having to pay people annual leave and Christmas pay—again, leaving the workers stranded.

There was one textile company where, when it went under, the employees got paid out the full rate. That company happened to be owned by former Prime Minister John Howard's brother. They got their full entitlements paid out. Of course, people understood that this was unfair: for us to continue to leave people in the lurch went through no fault of their own they found themselves without redundancy pay, their annual leave—all of which are legally theirs, but the money is just not there.

So, what did we do? After a stopgap scheme for the Ansett workers, there was a full scheme set up that applied to everyone in this country. It has been modified and improved over time, It says: 'If you find yourself in that situation tomorrow—where all of a sudden the employer has just gone under, the business has just gone under, you knew nothing about it and there is no money there—the government has a safety net for you.' That safety net at the moment means that pretty much in every circumstance all your entitlements are going to be paid, because the government and the public has recognised that it is not your fault. It is not for your fault that you were loyal to your employer and that you work for them for a long time. And it is not your fault that the company has gone under. Sometimes it is bad management decisions, sometimes it is illegal activity and sometimes it is just the consequences of a shifting economy. But, in any event, it is not your fault. The scheme we have at the moment looks after people, but this government has not seen a measure of support for ordinary working people in this country they did not want to attack. That is what it is doing with this bill.

With this bill—which the government did not take to the election and did not tell people about during the campaign period—the government is saying to people, especially those older or more loyal workers: 'If you find yourself in that situation, we are only going to pay a portion of what you're entitled to. For the rest of it, if the money's not there, then bad luck.' If the money is not there, then bad luck. You may be a worker who is 50, with limited English, and have given your employer loyal service for many years, and you may be expecting you will get two, three or four weeks a year if your company goes under; but do not count on that anymore. This government will not support you any longer. That is the effect of this government's bill.

When you look at it together with some of the other policies of this government you can see a pretty grim future for many people. In my state of Victoria, for example, one of the other things this government is trying to do—after having dared to the car makers to leave, which they then did—is cut the assistance that would primarily go to states like Victoria and South Australia. They want to cut the assistance they are giving to car makers and component manufacturers over the next three years—which might, in fact, force the car makers to leave even earlier. You will find tens of thousands of people who have worked for companies like the car makers or component manufacturers who, at least at the moment, think they have until 2017 to plan their lives. They may also find themselves, if the government gets its way, out of a job in a very short period of time, through no fault of their own. This government has taken the safety net away from them as well.

When you combine that with the fact that this government's approach to jobs and industry is to say: 'Hands off! We have no plan. We'll let whatever happens, happen. That is our only plan. We'll continue to give billions in subsidies to the likes of Gina Rinehart so she and her associates can buy cheap petrol and diesel fuel, but when it comes to an actual jobs plan and transitioning this country to a clean energy economy, we're going to ignore it. Away you go! If tens of thousands of people end up on the unemployment line, so be it.' When you put all these things together, you can see a grim future for workers who have done nothing other than be loyal to their employer and who have made no mistake other than to do what everyone of us does, which is to grow older and give loyal service. They are the ones who are going to be hardest hit.

The government talks about moral hazard and says: 'We can't keep doing this because it will potentially encourage businesses to behave badly.' There is no evidence this scheme is being abused. There is absolutely no suggestion, at all, this scheme is being abused. This is nothing other than an ideologically motivated attack. If there was evidence the scheme was being abused, and that some companies had said, 'Oh, tell you what, we will go under because we know the government is going to pick up the tab,' then bring it here and we will have a look at it,. There are other ways of looking after workers if we want to. We could have industry trust funds where employers are required to pay a certain percentage or fee into a fund which is there to look after people if they go under. That would be an incentive to employers to do the right thing. If we did that, or if we had an industry insurance scheme a bit like WorkCover where employers had to pay a fee, we could say to employers: 'Look, if you go under or you do the wrong thing, and you don't have enough money in there to look after your employees, we're going to put your premiums up.' There are many other ways to skin this cat, if the government is concerned about it, that would avoid moral hazard. But it is not moral hazard they are concerned about; they are simply out to take entitlements away from Australian workers.

They went to the election running a very small target campaign on people's rights at work. They went to the election saying: 'We are not going to reintroduce Work Choices.' But this is what we are seeing when we match this bill with other budget bills. Under another fair work amendment bill this government wants to put through, workers will be able to be paid in kind by their employer—a fish-and-chip shop owner is going to be able to pay you in fish and chips, which may be great for the owner of small business, but does not help you pay the rent. When you look at the fact that someone under 30 is going to spend six months of every year without any income at all and so will be forced to work under conditions that they perhaps would not have before, what does that mean? When someone under 30 is prepared to work for lower wages or be paid in fish and chips because they know the alternative is poverty, what does that mean for someone who is over 30? Why, if you are an employer, would you employ an older worker if you could employ a younger worker who is being forced, under pressure of poverty, to do it for less? It might not be called Work Choices but it is Work Choices by any other name. It is coming back in by stealth through the budget and measures like this.

This is a broken election promise. The government told people: 'We are not going to do things we have not told you about,' but this one of the things they did not tell us about. More than that, this is one of the biggest punches in the gut to older, loyal workers who should be entitled to think that, having worked somewhere for a particular period of time and having annual leave, it is theirs. If you have earnt long service leave, it is yours. If you have worked there and you are entitled to a redundancy pay under your agreement, it is yours. If you have not been paid your outstanding wages, they are yours. The Greens are very proud to say we agree with you, and we will make sure the government supports people who find themselves in difficult situations through no fault of their own. We oppose this bill.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I am also keen to make a contribution to this debate about the Fair Entitlements Guarantee Amendment Bill 2014. I acknowledge the member for Scullin, who spoke a moment ago; the member for Melbourne, who said some very valuable things just now about the bill; your own interest, Mr Deputy Speaker Mitchell, in your other roles in this place on these sorts of issues; and the member for Isaacs.

As members would be aware, among the technical amendments in this bill is the stinking core of the bill, which is the government's plan to cap the maximum redundancy payout provided under the government's Fair Entitlements Guarantee to 16 weeks, which is a dramatic and disappointing reduction from the 52 weeks cap that exists at the moment. I thought Terry Sweetman nailed it perfectly in The Courier Mail a bit earlier this month when he said that the purpose of this bill is to remove the 'fair' from the Fair Entitlements Guarantee. In this way, it is really a piece of the rest of the budget. It is disappointingly consistent with the rest of the budget, which panders to sectional interests, shifts the burden from business and asks the most vulnerable people to carry the can for this government's ideology. As the member for Melbourne said, it is the most vulnerable people in our community—the older workers and the workers who are made redundant—who need the help the most. It should not come as a surprise to us that this proposal began its life in the government's Commission of Audit, stacked as it was with representatives of big business and entirely free of anyone with an alternative perspective on some of these issues. It had predetermined outcomes. It was a cynical ploy used in a cynical way to prepare the ground for the harsh, extreme and divisive cuts that we saw in the budget, the sorts of cuts that the community is lining up to oppose and the reason why the government cannot get its budget through this place. In its implementation, we see yet another attack on working people; people who want to work; people who are made redundant; people who are just trying to get by; people who are doing the right thing and rightly expecting to be paid fairly for it and not to be thrown on the scrap heap when their employment ends; and people who rightly expect that in a wealthy nation like ours—a proud nation with a good history of looking after each other—there would be a safety net if somebody's employment ends through no fault of their own and they are made redundant.

A bit of history and also a bit of context for the House: it was in the interests of working Australians that Labor proudly introduced the Fair Entitlements Guarantee scheme in 2012. That guarantee was a vast improvement on the Howard-era General Employee Entitlements and Redundancy Scheme also known as GEERS. It is better for the three reasons. The first is that the Fair Entitlements Guarantee is enshrined in legislation while GEERS was an administrative arrangement that could be changed at the whim of a minister. The second is that the Fair Entitlements Guarantee covers the whole period to the end of employment, while GEERS only covered the period to which an insolvency practitioner was employed. The third is that GEERS capped a redundancy payment at four weeks, where the Fair Entitlements Guarantee was capped at 52 weeks, which is really the crux of the issue that we are talking about today as the government tries again to diminish and make much less fair the cap on the redundancy payment. Around 70,000 Australians were able to benefit from the government guaranteed redundancy payouts during the course of the last Labor government. That meant that something like $852 million in otherwise unpaid entitlements was paid out to families, families who were put in the most difficult position where they had a major wage-earner out of employment after long periods in the same job at the same company.

This legislation seeks to restrict the Fair Entitlements Guarantee so that the maximum payout available under the scheme is 16 weeks redundancy pay, as opposed to 52 weeks, which is the current maximum payout under the legislation that Labor proudly implemented in our time in government. As the member for Scullin said a moment ago, the excuse for the 16 weeks is that that is the maximum redundancy payable under the National Employment Standards. As experts in the Parliamentary Library and in industry have shown, this ignores the fact that longer payout periods have been agreed to under certain modern awards and enterprise bargaining agreements. In some industries longer payouts are entirely reasonable and appropriate for redundant employees. For example, in industries undergoing substantial structural change, longer redundancy periods may be necessary to cater for long-term employees who need to reskill or retrain. This is a really important issue that has been ignored by those opposite. There is a link between redundancy payouts and the sort of retraining and reskilling that we want to see in our economy when people lose their job through no fault of their own. A bigger redundancy payout for a longer period gives people the opportunity to undertake some of that retraining and reskilling that they need. We know that the labour market is quite uncertain at the moment. Over the first six months of the Abbott government more than 30,000 job losses were announced from Australia's largest employers. The sad reality is that many of those jobs lost or announced to be lost are now likely gone forever—at least in their most recent form. Workers in these industries need greater support to retrain and be redeployed into the workforce, which is why those longer redundancy periods may be appropriate.

In capping the Fair Entitlements Guarantee, the government seeks to blame workers for the cost of their own fair entitlements. This is illustrated best by the language that the Minister for Education used in his second reading speech that the scheme:

… creates a moral hazard. It provides an incentive for employers and unions to sign up to unsustainable redundancy entitlements.

It is an absurd comment for a minister to make about this scheme.

Apart from being a typical slur on unions who do a much better job representing workers than the government ever will, it is a slur that denies the genuine need for longer redundancy entitlements than those provided under the National Employment Standards. Consider, for instance, the 2,900 workers at Holden, the 2,500 at Toyota or the 1,200 Ford who will lose their jobs in the automotive manufacturing industry over the next few years. Many workers at these manufacturing plants have spent their whole working life in the automotive manufacturing industry and many of them have 20 years or more loyalty to a single car company. It is not like an experienced worker from Ford can go and find similar work at Holden or Toyota or at another car manufacturer when they have all been goaded into leaving town together. We do need to retrain and develop skills for their future employment. That is why those longer redundancies are appropriate—longer redundancies which recognise the skills, experience and the difficult reality of starting a brand-new career at the age of over 40. That is why certain EBAs and some modern awards do provide for redundancy payouts of up to 52 weeks. The government is saying to workers facing redundancy and an uncertain employment future that it will not recognise or value the redundancy period set out in these EBAs and modern awards. They will not recognise their skills, or experience or hurdles to retraining or upskilling and redeploying into the workforce.

We should not weaken employee protection for fair redundancy entitlements. As I said a moment ago, there is a fair bit of uncertainty in the labour market at the moment. If there is one thing that characterises the labour market in 2014 it is that uncertainty. The reality is that our response to the structural change underway in the Australian workforce needs to be a more comprehensive plan for jobs. The government has no plan for jobs whatsoever. Even the member for Eden-Monaro has said, in a burst of honesty, that the government does 'desperately' need a job plan.

There is a range of reasons for this. One of these reasons is that the labour market is changing so rapidly. And one of the reasons for that is automation—the technological progress that we are seeing in our economy, which does mean that increasingly jobs are automated. We are seeing an increase in robotics, artificial intelligence and all sorts of technological advance, which do make some of the traditional industries and some of the traditional tasks of the labour market redundant. That has flow-on consequences for people in the labour market.

The Economist magazine describes this rapid technological advance as 'the oncoming wave'. Their argument is that a combination of big data and smart machines will fully overtake some occupations and allow other firms to do the same job with fewer workers. It is not hard to imagine the impact of that on the workforce. That is why American, Professor Alan Krueger, who advises President Barack Obama, found that 'skill biased technological change' was the dominant driver of inequality, dwarfing other very important factors like declining unionisation or changes in the minimum wage.

To give you an example—and it is an example that I have used in this place before—the average farm in the US makes about $125,000 in revenue for every employee on the books. In comparison, Google makes something like a million dollars per employee. You can see the profitability in a company that is getting that sort of return from fewer workers. That is one indication among many of how technology is changing our industries.

The OECD predicts a 20 per cent rise in jobs requiring highly-educated workers in the future, corresponding to a 10 per cent fall in jobs for the low-skilled. Again, it is not hard to imagine what that means for the make-up of our labour market and the fact that some workers—often older workers—are at greater risk of redundancy. That does remind us of the chilling warnings of a guy called Tyler Cowen, who said that we cannot become a world or a country divided into two groups: those who are good at working with intelligent machines and those who are replaced by them.

Our response to this rapid technological advance needs to be twofold. The first thing is that we need to care for workers who are displaced by technological progress. And the second thing is that we need to ensure the workforce of tomorrow is skilled, creative and dynamic enough to succeed in the face of technological progress. It seems at first blush that these two things are different things: educating for the future and looking after people who have been made redundant in the workforce of today. But in reality they are linked by that idea that I introduced a moment ago, which is that often these longer redundancy periods are what make possible the sort of retraining, reskilling and redeployment that people need to do.

You can imagine, Mr Deputy Speaker, that if you do have a longer redundancy period that you might then take the opportunity, with that financial security in place, to do the course or to do the retraining that makes it possible for you to find a new job, whether it is in a similar industry or in an entirely different industry. And so we need to see those two things as part of the same whole: looking after people who fall out of the labour market but also giving them the ability, the time and the financial security to undertake that necessary retraining.

Some of these ideas about the changing nature of the Australian workforce are what sparked the recently-launched National Union of Workers campaign called 'Jobs you can count on'. The NUW are seeking to highlight the growing problem of inequality and job insecurity in Australia and the urgent need to address this issue as a matter of national priority. The NUW highlights that casual workers made up only 15 per cent of the workforce in 1984, climbing to 28 per cent in 2004 and all the way up to 40 per cent today. What is more, Australia has the second-highest rate of insecure work in the world, beaten only by Spain.

We do need to acknowledge and confront this problem head-on. We need to push for jobs that workers can count on in this country and make sure all workers are able to enjoy the same rights at work. I am really pleased to stand united with Australian workers and the NUW to seek better protections for the huge number of Australians currently in insecure employment. Labor will always be the party that stands for workers, their rights and protections in the workplace, and for jobs that Australians can count on.

So, Labor will be opposing the Fair Entitlements Guarantee Amendment Bill 2014. Workers do deserve the assurance that they will receive all of the benefits they are entitled to if they are made redundant, not just some workers, not just some of the time but all workers who are entitled to it all the time. This attack on workers in this piece of legislation, as I said before, takes the 'Fair' out of the Fair Entitlements Guarantee. It is unfair and it is short-sighted. It does highlight this government's lack of a plan for jobs and lack of a plan for a workforce which is ready for all of the challenges of the future, whether they be technological advance, or automation or all of the other ways that our labour market is evolving. We need to make sure that people are protected from the worst aspects of that change and that they have the financial security, the time, the means and the ability to retrain and redeploy into different roles.

So, Labor will continue to stand up for workers' rights and an education system that will deliver us the smart, dynamic workforce ready to confront the challenges of the labour market into the future.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I remember 26 June 2013 for a different reason compared to what so many in this place and so many Australians remember it for. It was the last time before I was elected as the member for Bendigo that I had to attend a site meeting to speak with some very stressed workers and union members about their entitlements. This type of meeting is something that union organisers quite often go to. For me it was because a company, Swan Cleaning, had gone into receivership, it had gone bankrupt.

When you are in these meetings, what you fall back on for these workers is this particular guarantee and this particular piece of legislation—the Fair Entitlements Guarantee Act. Yes, it improves GEERS. I can remember speaking about GEERS and the importance of GEERS to workers in their workplaces. But as the previous speaker, the member for Rankin, said it was not enshrined in legislation. That is a very important note to make.

On this particular day I was discussing the Fair Entitlements Guarantee with these workers. And let us just for a moment acknowledge what happens when a company goes bankrupt. Quite often it happens at short notice and the employees are the last to find out. Quite often in the industries I used to represent, the workers I supported would not receive their last couple of pay cheques; they would not have their super paid; they are owed sick leave, holiday leave and quite often long service leave entitlements. I remember Robbie in this particular case. Robbie has worked at the Bendigo Marketplace since it opened, so we are talking 15 years that she has been a cleaner there. In that time she has worked for several companies—in fact, three of them have gone bankrupt, which speaks to the nature of the cleaning industry and contract cleaning and broader problems that we have—but what Robbie has consistently lost in that time is her continuity of service, her long service leave and her superannuation entitlements. But at least one of the things that Robbie has been guaranteed more recently is the fact that she would get paid her wages.

That speaks to the very nature of why the Fair Entitlements Guarantee legislation is so important. It ensures that workers who have done the right thing, who have turned up and worked hard, are not disadvantaged and do not go without because their company has not been able to manage the books properly. In most industries, and in the cleaning industry in particular, businesses go bankrupt because competition has driven down contract prices and companies take on contracts that they cannot afford to pay people properly. That is one reason. Another reason is because we do have some shonky people in the industry who literally rip their workers off and go bankrupt, and then they go into the phoenixing arrangements. That is another reason why companies go bankrupt, and largely it is through their own fault. Another reason is what we have going on in industries like the automotive industry at the moment—that is, because of bad government policy, because of a set of global circumstances, there is pressure on those firms and some of them may, unfortunately, have to file for bankruptcy because they literally are not able to keep operating because their markets have been lost.

What is wrong with the Fair Entitlements Guarantee Amendment Bill 2014 is that it seeks to cap the assistance for redundancy pay and entitlements to a threshold of 16 weeks' pay and seeks to align it with the maximum payout under the national employment standards. In other words it is a cut: it is changing from a maximum of four weeks per year of service to a maximum of 16 weeks in total, so it does not take into consideration at all the length of time some workers have served with their employers. And as the previous speaker said, the extra pay and the extra time would allow them to retrain, to reskill and to re-enter the workforce and to not become another person in the unemployment queue. That is the point that this government is missing: if you support workers who have been made redundant, if you support workers who have lost their jobs, if you help them in the early days and the early weeks to retrain, then they are more likely to re-enter the workforce. The statistics prove that if you can get somebody back to work within their first six months of unemployment, then they are more likely to stay in that job for longer. Whether it be cutting young people's unemployment benefits entirely, making it almost impossible for them to get to their job interviews, to get to their job training because they have no support to live on, or whether it be cutting back this entitlement, the government seeks to punish workers who find themselves without work.

It is particularly disappointing that the government are changing this legislation at the same time they are also overseeing the dismantling of the automotive sector. These changes would spell disaster for workers in the automotive sector, as well as other workers in other parts of the manufacturing industry. I do note at this point there are lots of speakers from this side of the House listed to speak on this bill, but there are very few speakers listed from the other side of the House. The coalition's marginal seat members, who may have lots of auto workers living in their electorates, are not speaking on this. They are not putting their names to this bill so that people who are made redundant in their electorates cannot put their names to this government cutting this entitlement. It comes back to priorities, and this government have demonstrated over and over again twisted priorities: they are not willing to invest in workers who find themselves being made redundant; they are not willing to support those workers. Instead, their twisted priority is, as we have heard today, lots of debate around corporate tax and not ensuring that big companies pay their fair share of corporate tax.

What else is going to hurt the automotive sector, apart from these changes to the Fair Entitlements Guarantee, is the fact that the government is cutting funding to the Automotive Transformation Scheme. That fund was established to encourage competitive investment and innovation within the automotive industry. Yes, we know that Ford is pulling out; yes, we know that Holden is leaving; and, yes, we know that Toyota has now made the decision to go. But there could have been a chance for some of the component suppliers to these major car manufacturers.

The former Labor government established a fund to help invest in that, to try to create new jobs and save the jobs we had in the automotive industry and see if there was a way that some of that work could be done for new industries. Just one local example of that is in Bendigo where we manufacture the Bushmaster. Some of the supply chain is through local small manufacturers who previously supplied the automotive industry. They are looking at talking to Thales about investing and innovating to see if there is a way they can switch some of their work from the automotive industry into supplying parts not just for the Bushmaster but also, hopefully, the Hawkei.

Potentially, they would have been able to apply for some funding to ensure that that innovation occurred. But what we have seen in the budget is a cut of $200 million over the next two years. In many ways this will only speed up the closure of our manufacturing in the automotive industry because we are taking away the government investment that would have helped the industry transition. That is another bill that is due to be debated today and, again, I note that the members who have manufacturing workers in their electorates are currently not scheduled to speak on that bill.

There is a third way in which the automotive industry is facing a huge attack, one where you could see, again, the early shutdown of the automotive industry. This is an industry which employs upwards of 50,000 people when you put all the jobs in the component sector and the major manufacturers like Holden and Ford and Toyota together, and the threat, of course, will be the impact of KAFTA, the Korea-Australia Free Trade Agreement. Yes, the agreement hopes to create agricultural jobs, but these jobs are going to be at the cost of manufacturing jobs in the car manufacturing sector. This will lead to high-skilled jobs being lost to our local economy, high-skilled, high-paid jobs, to relatively low-paid jobs in the agricultural sector. That is just another problem with the shifting of jobs that is going on.

This agreement will contribute to the loss of Australia's most advanced manufacturing industry, the car manufacturing industry, and cost tens of thousands of jobs. So at a time when a KAFTA agreement will speed up the loss of jobs in manufacturing, at a time when the government is cutting funding to the automotive transitional scheme, we are now seeing the government attack those workers who will be made redundant by reducing their entitlements guarantee to 16 weeks—capping their entitlements at 16 weeks redundancy, reducing them from the current arrangement of four weeks for every year of service. One of the deep concerns that has been raised by stakeholders in the industry is that these changes could be an incentive to vulnerable auto component manufacturers who will close their doors early to ensure that their employees remain covered by the current arrangements.

This government is creating a crisis within the automotive sector. Rather than a transitional situation where automotive manufacturing is slowly phased out, multiple policy and legislative decisions by this government are speeding up these job losses. It is a decision that has been deliberately made by this government not in the interests of these workers and not in the interests of these local economies, but in the interests of a budget quick-fix. The decision has been made in the interests of people that are not looking to protect Australian jobs but on looking overseas and trying to make product overseas at the expense of Australian jobs. So we are facing a crisis within the automotive industry on these particular levels and we are seeing a government that does not believe in investing in those workers to ensure that they have the skills to go on to the next job.

This is another example of a lie. The then shadow employment minister Eric Abetz said that 'you can be satisfied there is no risk to your entitlements'. This is what he put in writing to people working in the sector. It was just a blatant lie. He has not guaranteed their entitlements. One of the first acts he has done in his first year as the minister for the sector is to reintroduce an attack, an individual agreement, which is like bringing back Work Choices. He has gone after their Fair Entitlements Guarantee scheme, which he said he would not do, and then he has cut funding to a sector, innovation funding that could have seen a transition towards industry and jobs.

That is the gist of it. This government has no plan for jobs. They are creating more and more insecurity within the industry, within workplaces and within our community. They have got no ability to work with industry to create the jobs of the future, jobs that you can count on. The NUW's campaign calling for jobs that you can count on highlights how this government just lacks innovation and ingenuity. I am proud to stand with the NUW and working Australians to say that we need a government with a policy to create jobs that you can count on. Australia has the second highest rate of casualisation and insecure work in the world particularly within some industries like food processing. So if we are serious about creating jobs in the agricultural industry, then we need to be serious about creating jobs we can count on. This bill is a bad bill. It goes after workers who will be made redundant because of bad policy. It is a bill that everybody should be voting down.

Justine Elliot (Richmond, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to speak on the Fair Entitlements Guarantee Amendment Bill 2014 put forward by the Abbott Liberal-National government. I oppose the bill for the same reasons as other speakers on this side of the House—that is, it is unfair and an absolute attack on workers. Labor is very proud to be standing up for workers and for workers' rights. Unfortunately, the reforms and changes the government are putting forward in this bill represent everything but fairness. The changes they are bringing with the Fair Entitlements Guarantee are not fair at all. I note the lack of speakers from the other side. It is very disappointing that none of them have been prepared to come and speak and stand up for workers. Their ideology and their approach have been confirmed today by the absolute lack of speakers.

The Fair Entitlements Guarantee was initially designed as a safety net scheme to cover certain unpaid employment entitlements when employees lose their job through business liquidation or the bankruptcy of their employer. Labor in government introduced the Fair Entitlements Guarantee Legislation in 2012, which delivered the strongest protections for workers' entitlements that we had ever seen in this country. At the time, it replaced the General Employee Entitlements and Redundancy Scheme, or GEERS as it was known. GEERS was operated by the department in accordance with the GEERS operational arrangements and it had no legislative basis. The problem with this was that it made it too easy for the scheme to be amended or dismantled, and it was for this reason that Labor moved to strengthen protections and legislated our scheme. It is fortunate that we did this as we are now seeing what we were afraid—the Fair Entitlements Guarantee under attack from this government.

The bill seeks to cap the assistance for redundancy pay entitlements to a threshold of 16 weeks pay—a cut from the current four weeks per year of service—and aligns the payment with the maximum payable under the National Employment Standards. The bill also includes three amendments to the Fair Entitlements Guarantee legislation to clarify that a debt owed by a claimant for a particular entitlement can be offset proportionally against other entitlements payable to the claimant under the scheme if the debt exceeds the entitlement to which it relates; that amounts required to be withheld by law, such as pay as you go taxation, will be deducted from payments when they are made to the claimant; and that payments can be made to the estate of a deceased employee or claimant.

The bill also amends the act so that the issue of whether a person has reasonably pursued a debt owed by the employer is not a consideration for eligibility for any payment under the scheme. It is a matter that is dealt with when calculating the amount a claimant is owed. It establishes arrangements for costs associated with AAT appeals of decisions relating to the Fair Entitlements Guarantee to be drawn from the special appropriation.

While some of these amendments may not seem extreme at face value, if you closely at the detail you will see how harsh the measures and the changes in this bill are. When we look to the past of the Liberal-National government, they do have form when it comes to attacking workers—and we certainly saw that with Work Choices. I can reflect upon it in my area, in my seat of Richmond, where Work Choices is absolutely devastating and people still talk about how the National Party punished those people of regional Australia by introducing Work Choices. It was devastating. Many individuals had their working conditions slashed. It goes to the ideological basis of this government; what they do stand for is an attack upon workers.

Indeed, last week I raised in this House my concerns about Centrelink workers and how the government is now trying to outsource many of their jobs as well. Right across the board, in so many industries, we have seen many attacks. Time and time again since the election last year this government has demonstrated how many promises they are prepared to break in so many areas—and we are certainly seeing it in relation to this. As I have said, their capping of the Fair Entitlement Guarantee from a maximum of four weeks pay per year of service to a maximum of 16 weeks constitutes an unfair cut for those who are facing the terrible prospect of redundancy. It is devastating for those workers and their families to, firstly, be facing redundancy and then, on top of that, to have this unfair cut to their entitlements that they were hoping to receive. This is often a very sudden situation that occurs when the business they work in is not running anymore.

Fundamentally, this bill is very bad news for those facing redundancy or pursuing entitlements and lost earnings that are rightfully theirs. It is especially bad news for those in the automotive manufacturing industry and also mature-age workers. It is quite clear that the government's cut to this scheme disproportionately affects older Australians. The proposed changes are also ultimately at odds with some of the other policies we hear from the government and their objectives. They talk about decreasing the reliance of older Australians on the age pension and they also refer to their Restart program. What they are doing in terms of changing the scheme is really at odds with that. Given this contradiction in policy priorities, you can only conclude that this is an ideological assault on workers and their families. It contradicts other things the government have said.

But Labor understands the difficulties older Australians have in getting back into the workforce, particularly those in the manufacturing, automotive and textile industries. We on this side of the House remain committed to finding ways to assist those people—not dragging them down or punishing them as the government seems to be continuously doing.

The government recently abandoned the automotive manufacturing industry and its workers, and this bill will simply rub salt into that wound. Despite promises to the contrary, all we get are broken promises. The motivation for this unfair assault on our automotive manufacturing workers came from the recommendations that were set down by the government's Commission of Audit—the very same Commission of Audit that gave way to some of the harshest and cruellest budget measures set down by a government in recent memory. Given the harshness and extreme nature of the Commission of Audit's recommendations, it would not be surprising that many people simply do not accept that its advice was formed without the undue influence of a certain political ideology in mind.

Undoubtedly, if this bill before the House is passed, the effects on the automotive manufacturing industry will be devastating. Many workers within that particular industry have worked there for in excess of 10 or 20 years. Under the current scheme, their entitlements under the Fair Entitlements Guarantee are based on their years of service—for example, 20 years. But under the scheme being advanced in this bill, they will be entitled to a maximum of 16 weeks pay irrespective of their service—and that is essentially why it is not fair. Also, this Liberal-National government has overseen the painful death of the automotive manufacturing sector. Now, when workers most need assistance through the Fair Entitlements Guarantee, this government has moved to take it away, so it really is doubly cruel. The cut to the Fair Entitlements Guarantee is connected to and compounded by cuts to the Automotive Transformation Scheme. Labor's scheme encouraged competitive investment and innovation in the Australian automotive industry to place it on an economically sustainable footing.

The government have stated they will save $618 million over eight years by terminating the Automotive Transformation Scheme from 1 January 2018. However, this includes $200 million in cuts over the next two years, long before the scheduled closures of manufacturing operations for Ford, Holden and Toyota. This is in direct contrast to the comments that we heard from the now junior infrastructure minister, the member for Mayo, who said before the election:

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

Clearly, that is not the case—another broken promise—because this bill is just another attack upon workers and their entitlements. Again we see that in opposition they say one thing and, in government, totally change. In fact, as late as July last year the current Minister for Employment promised Australian workers: 'You can be satisfied there is no risk to your entitlements.' Yet here we are debating this bill and that is exactly what they are doing: cutting those entitlements—yet another untruth from the government.

The introduction of this bill highlights how very little the government respect the truth. Clearly, they do not respect it at all. We know they have told a whole series of different lies on different issues, whether about cutting pensions, the GP tax, the petrol tax or an increase in university fees. Now we are seeing a whole host of untruths about protecting workers and their fair entitlements.

There are also many concerns that this bill may act as an incentive for vulnerable automotive component manufacturers to close their doors early, while their employees remain covered by the guarantee arrangements that the former Labor government put in place. The problem will be compounded then because, 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. You would potentially have a knock-on effect. The fear is that the closure of two or three small automotive component manufacturers may spark more closures of automotive manufacturing in a very short period of time. The concern with that is that this could lead to economic downturns and troubles for the industry and a wide-ranging flow-on for the country generally. It would be quite concerning if this were to occur. Again, this is all a result of this government's unfair attack upon both workers and the automotive industry.

This bill truly is a sad reflection on the government's commitment to Australian jobs. The fact is that they do not have any commitment to creating jobs. Despite the grandiose statements they may have made to the contrary, they do not seem to have any plans in place. They are not doing anything. All they are doing is demonising hardworking Australian workers. Constantly in this place we hear them demonising workers. Instead of spending their time attacking and demonising, they should be getting on with articulating a plan for jobs. That is where their focus should be, particularly when we look at Australia's unemployment rate, which is just over six per cent. Of course, in the regions it is a lot higher than that and youth unemployment is a lot higher than that, yet the government still have no plans for jobs and no plans to address those high levels of unemployment. Particularly, as I say, in regional areas, where the unemployment rate is much higher, they have no plans at all and are not addressing the issue. It is a devastating truth but a reflection of the lack of concern that the government have towards providing employment and training. We have also seen many massive cuts to training and education right across the board, which, again, more severely impacts people in regional areas.

At the heart of this, the government did not make any mention of any of the changes that we see in this bill before the election, so, essentially, there is no mandate for them to be taking this action and scrapping the Fair Entitlements Guarantee. Despite telling voters before the election that they would not make changes to workers' pay and conditions, we see again that the government are slowly eroding our industrial relations system. That is what really concerns people. People raise with me all the time the fear that Work Choices will be brought back and they do not trust what the government say because they made all those promises before the last election—no cuts to health or education, no cuts to any entitlements, no cuts across the board and no new taxes—but we have seen all of those things come about. They have broken all of those promises.

So, quite rightly, people have a huge amount of concern about whether we will see a return to Work Choices and their working conditions will again be severely slashed, particularly penalty rates. A lot of people in my area raise that issue constantly with me. We saw a very good report recently from the McKell Institute about the impact of cutting penalty rates in the retail sector in regional areas. In areas like mine, Richmond, in far north New South Wales, it will be absolutely devastating for those workers to have their penalty rates cut. But that is what people are concerned about. In our area, they know that is what the National Party do. The National Party cut penalty rates and cut working conditions. People know that is absolutely the case and they have very legitimate fears about a return to Work Choices.

It is only those of us on this side of the House and the Labor government who have stood up for workers. We will continue to do that and we are very proud to do that, which is totally opposed to those on the other side, who continually attack workers. We are very, very proud of our record and we will certainly stand by workers and keep fighting for them.

It is for the reasons that I have raised this evening—the unfairness and the fact that it is essentially a broken promise—that I oppose this bill. I condemn those on the other side, one, for failing to speak in the debate on this bill and, two, for failing to support the workers of Australia. They have abandoned the people of Australia and, indeed, the National Party members have abandoned the people of rural and regional Australia—yet again. As we have seen so many times, they continue to abandon the people in the country areas, who need security in their employment and access to so many services. For all those reasons, I oppose this bill.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to oppose the Fair Entitlements Guarantee Amendment Bill 2014. I oppose the measures in this bill as they are further examples of cruel Abbott government cuts.

As is the case with so much of this 44th parliament, you should not look to what this government says but to what they do. Prior to the election last year commitments were made to the hardworking Australian public that much of the status quo would remain. There would be no cuts to education. There would be no cuts to health, no cuts to the ABC, no changes to pensions. The list goes on, as does the attack on the vulnerable that we are witnessing every day. We were told that Work Choices was created, and yet attacks on workers are rife from this government.

The introduction of this legislation today is another example of a coalition government's complete lack of understanding of the pressures faced by workers in this climate of rising unemployment and transitioning of our economy. In July last year, as the member for Richmond mentioned, Senator Eric Abetz, now the Minister for Employment, assured hardworking Australians, 'You can be satisfied that there is no risk to entitlements,' and yet I have been twice on my feet in this House to oppose bills that prove that Work Choices has survived the fire. To use an analogy from popular culture—one that perhaps will date me!—Work Choices is slowly coming back to life. Like the Terminator, it is re-forming and continuing its pursuit of Sarah Connor.

Before the election and even when the fair work amendment bill was introduced the government promised the proposed amendments would go no further than their pre-election promises and would only go to those recommendations from the 2012 fair work review. And yet this bill made changes to individual flexibility arrangements, greenfields agreements and right-of-entry provisions. Similarly, before the election the Abbott government made a commitment to regulate registered organisations in the same way as corporations, but the fair work registered organisations bill did not implement the coalition's election promise. It went much further than that in its attack on unions and, through them, workers.

So what does this bill aim to achieve? It aims to cut worker entitlements. The fair entitlement guarantee is a safety net to cover unpaid employee entitlements when workers lose their jobs through liquidation or bankruptcy of their employer. Workers who through no fault of their own lose their job are guaranteed a strong safety net for their entitlements. Many may remember this previously being referred to as the GEERS scheme, which Labor in government strengthened by giving a legislative basis. The scheme currently allows for up to 13 weeks of unpaid wages, annual and long service leave owing, if required a five week payment in lieu of notice and redundancy pay of four weeks for every year of service.

I know many on this side of the chamber have direct experience of people they know and community members in their electorates being devastated by a job loss. Given the Treasurer's exhortations today to judge people by what they do, I can assert that I am not sure many of those opposite have empathy with people like automotive workers who lose their jobs. That judgement, of course, comes after witnessing the Treasurer goading GMH to wind up their Australian operations.

This entitlement guarantee goes some way to assist when a devastating job loss occurs. This bill cuts the entitlement to a maximum of 16 weeks pay regardless of how long you have been in the workplace. That is the equivalent of four years service entitlements. Workers who have given long, loyal service for 10, 20 and in some cases 30-plus years will suffer considerable loss in their payouts. If this bill gets passed into law, this cut will have a devastating impact on workers, particularly those in the west of Melbourne who are still absorbing the various automotive and shipbuilding cuts and closures—not to mention those employed in the small industries that are part of the supply chain that will potentially close due to bankruptcy as work dries up in those industries. How many of my local hardworking manufacturing workers will be impacted by this cruel change?

This government made no mention of these changes prior to the election. In my mind and in the minds of so many voters the government has no mandate to make this change. Indeed, in this climate of rising unemployment, particularly in the area I represent, the government should be strengthening and expanding support for newly unemployed people. This change, however, does fit a pattern—a pattern where support for employment is being eroded by this government.

Whereas the proposed changes to Newstart for those aged under 30 have been widely discussed, the changes in this bill impact more severely on older workers who have been loyal employees in one company, some for their entire working career. I understand the difficulties that many older workers experience when attempting to gain employment. Despite best efforts, there is age discrimination when it comes to employment. Older workers often have limited formal qualifications and due to family commitments do not have the flexibility to move interstate to chase jobs. This fair entitlements guarantee went some way to support such workers when impacted by a job loss. It was support to give time to find new employment whilst at the same time being able to make house payments, pay the bills and school fees and keep food on the table. We need to remember that this payment is not an extra payment. It is paying these workers their entitlements. Annual and long service leave, pay in lieu of notice, redundancy payments—these payments provide an opportunity for a worker to make a new start, find new employment and stay out of the Newstart system. In some ways this cut is in fact another example of a false economy from this government so concerned about the economy.

As I alluded to earlier, those workers in the automotive industry will be significantly impacted by these changes. We know this industry is declining and that this government has withdrawn support previously promised. Before the election now junior minister Jamie Briggs said, 'The coalition has committed to ongoing support for the auto industry and has agreed to continue funding the Automotive Transformation Scheme.' Now this government that Jamie Briggs is so proud to be part of has overseen the death of the automotive industry, and there are dire consequences for the rest of the supply chain.

And where are many of the supply chain employees located? In the area I represent. It is estimated that there are 50,000 workers in the automotive industry, with a further 100,000 in the supply chain—workers who are facing uncertainty in their working futures. Anecdotally, we are hearing that some employers are even considering closing their doors earlier so their workers can be covered by the existing scheme.

This Abbott government has provided no support. Indeed, it has withdrawn or cut many employment support programs and projects across Australia. These cuts are affecting people and families in Lalor, an area where the unemployment rate is more than two per cent above the national average.

Whilst the government have not supported the automotive industry, they have, along with the Victorian state government, provided some support to some areas affected by job losses through the Innovation and Investment Fund. This fund is to be utilised to create new jobs—new jobs sorely needed in the light of the automotive manufacturing cuts. These new jobs are needed locally in the area I represent.

But has the government extended that support to Melbourne's west? The short answer is: no. A report in my local paper, the Wyndham Leader today has a headline, 'West left in the lurch'. In it it quotes Melbourne's West Economic Response Taskforce that includes LeadWest and six local government areas in Melbourne's west. The article says:

The taskforce, which includes LeadWest—

et cetera—

has requested fair and equitable treatment given the state and federal response to the exit of Ford from Geelong and Broadmeadows.

Businesses in Melbourne's north and Geelong each have access to $24.5 million for projects that create growth and job opportunities.

Craig Rowley, head of LeadWest, called for further assistance for the west as investments in infrastructure projects alone were insufficient responses. He is quoted in the article:

"When Toyota exited, we thought it would only be fair if Melbourne's west had a similar job stimulating funding pool, but our worst fears have been realised as there is no appetite from this government for doing that," he said. Businesses would be drawn by incentives to the north not the west …

This is incredibly disappointing and it just adds another layer of pressure—a layer of a lack of support coming from this government while we stand here and debate reducing workers' entitlements when they face job losses.

Sadly, no new investment is forthcoming. This government is delivering cuts to entitlements and no support for job creation. We on this side of the House will join those six local governments, LeadWest and the people of Geelong and we will continue to make the case for innovation and investment. We will raise projects like the Bay West development, and ask that it be reviewed to ensure that there are new opportunities in the west and Geelong.

Labor has shown that it understands the unique nature of our expanding and changing cities by establishing our caucus committee on cities, and by appointing Anthony Albanese to focus on cities policy. This is in stark contrast to those opposite.

In conclusion, I know that some of those opposite must also recognise the need for job creation and support for workers. They must see their local hardworking Australians struggle when unemployment rises in their areas. They must see the despair in the faces of the unemployed. But together as a government somehow they have found a way not to speak up. And they are not speaking up in this chamber today. They are not defending this bill; nor are they opposing this bill. It is left to this side of the House to argue these points.

In my area we need support for jobs, and our workers need support to access their entitlements. But this government is ripping away this provision at a time when workers need it most. It is a cruel and heartless decision for struggling families and is piled on top of real job losses, potential job losses and the anxiety that comes with that.

Like so much that this government has done in its first 12 months, the devil is in the detail of this legislation. When you unpick the changes being proposed the legislation seems to benefit the government in savings but not the people of Australia the government is meant to serve. The government continues to take its advice from big business through the Business Council of Australia and the heavily weighted Commission of Audit. The Abbott government shows that it has no understanding of the impact of taking away well-earned support for average workers.

Labor, in government, wanted to ensure workers received the strongest protections for worker entitlements. That is why we need to embed these entitlements in legislation. As the member for Richmond said before me, we are grateful that we did that, and that we are on our feet today making a point about these changes. If we had not legislated, these measures would easily have been dismantled by instructions to the relevant department.

I am thankful that these legislative changes were put in place, as it gave me a chance today to expose these cruel measures.

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

I rise tonight, to speak about the Fair Entitlements Guarantee Amendment Bill 2014 on behalf of the workers in my electorate of Indi, and to make suggestions to further help workers protected by this legislation and taxpayers, who carry the financial burden of this protection.

The Fair Entitlements Guarantee scheme has been critical for a group of Wangaratta workers who found themselves employed one day and without stable work the next, through no fault of their own. Simply known as FEG, this government scheme provides a government funded safety net for workers who are often suddenly left without a job and without redundancy pay entitlements when companies are liquidated and are unable to pay the entitlements to the workers.

Sadly, this was the case for the 59 Bruck Textile Technologies workers in Wangaratta, in my electorate, who unfortunately lost their jobs suddenly on 11 July this year. Circumstances meant that they were left with no entitlements. Many had been with the company for decades. The sudden liquidation of the company, which had been an icon in Wangaratta and the textile industry for 70 years, came as a tremendous shock to the workforce and especially to the local community.

FEG was immediately spoken about as a government mechanism in place to assist these workers by paying out many outstanding entitlements. This was valued at $3.8 million. Workers were supported by advocates from the Textile, Clothing and Footwear Union. I would like to acknowledge that union, and thank them for their excellent advocacy and terrific ability to work across difference. The workers were worried, however, that these payments would take up to six months to come through. They believed that two months would be the best-case scenario. So, one of the most pleasing aspects of this sad tale was the fact that FEG payments were made more quickly than people in the textile and clothing industry had ever seen occur. I ask the government to allow the workers access to the scheme as quickly as possible. The Minister for Employment, Senator Eric Abetz, and his department are to be thanked for making good on his commitment to expedite the FEG to get outstanding entitlements paid as soon as possible. For these workers to have been paid most of what they were owed by Bruck Textile Technologies within six weeks, the government is to be commended for its swift and decisive action. I am personally very grateful to the minister for the work that he did.

On 22 August 22, in Wangaratta, I spoke with the redundant workers at a skills workshop. I quickly learnt that, while they are extremely grateful for the FEG payments and for the work that my staff and I have done with the government, they want the government to take action to improve the scheme—and it is to these comments that I will now address my thoughts. Firstly, they asked us to ensure that workers get all the entitlements they are owed. Secondly, they asked us to legislate to protect workers from the actions and negative impact of companies such as Bruck Textile Technologies. Regarding the workers' entitlements, they told me that not all the accrued and banked time was paid. They felt that they were not paid their full dues. In normal circumstances, when leaving employment they would have been paid these entitlements. The redundant workers feel strongly that they are not to blame for the way their employment was terminated—a feeling which I share.

Regarding the larger issue of Bruck's action as a corporate entity, the redundant workers are angry that the taxpayer is carrying the financial burden for what has occurred. They believe that the company had a responsibility to meet its corporate fiduciary obligations. Some of the workers have spoken with me about their feelings of embarrassment and invalidation. They do not want to rely on charity or be seen to be relying on handouts. The redundant workers also do not want their former colleagues, or any other employees in Australia, to go through what they did when they were suddenly made redundant. This says a lot about the caring nature of these people in my community, who are now looking for work and facing an uncertain future. Fundamentally, they care for their families and the community and do not want their experience to be felt by other people.

The workers came up with a key message and asked me to pass it onto this parliament: 'Don't let this happen again. Protect the people still working. Enact draft legislation that ensures workers who are forced to access FEG are paid their full entitlements such as accrued time and banked time. Enact legislation to stop companies from relying on FEG to pay entitlements.'

It was not only me who had a task to do when I left that workshop. Kerrie Seymour, a long-time Bruck employee, left the workshop that day and put together a petition to the House on this issue. That petition is now with the Petitions Committee, and I will table it as soon as it is returned to my office.

Charles Sargent, a worker made redundant by Bruck, has written to me proposing some powerful and reasonable measures the government should consider to strengthen the oversight of companies:

Ensure adequate powers rest with ASIC or other regulators to monitor and investigate companies to prevent reliance on FEG, increase the scrutiny on the conduct of company directors when the company has initiated liquidation, hold the management of liquidating companies individually liable for failing to provide for the payout of employee entitlements.

Minister Pyne's second reading speech on this bill affirms the government's support for FEG as a necessary safety measure but one that should be used as an exception and a scheme of last resort. When I met with the CEO of Bruck on the day the redundancy notices were handed to workers, I asked him what provisions Bruck was making to provide entitlements to those made redundant. The director said openly that that FEG would provide these entitlements.

In closing, I am very proud that the workers in Wangaratta looked to my office for assistance and that we have been able to help them. I am very proud that I can deliver the relationship of government from a position of being an Independent who really works for the people of Wangaratta. I am absolutely proud to be a representative of these workers. I ask that the government go further than simply limiting the payments available under FEG. If this is the only change that is made to the scheme, it may hurt those who come to rely on FEG in the future. The government should ensure that fewer companies rely on FEG. I call on the government to do more to ensure that companies genuinely make provisions for large redundancies so that FEG can genuinely become a scheme of last resort rather than simply a corporate offload.

Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

I note that only one of the 89 members in the government was prepared to come into this chamber and defend the legislation. Whilst I did hear that one member's contribution, I did not think he was able to defend it. But at least he had the courage to come into the chamber and have a go at defending the legislation. My point is that the fact that only one member of the government was prepared to come in here and try to defend this legislation sums up just how bad it really is. It simply highlights that this is bad legislation. No other government members are prepared to put their name to it—although I doubt very much that they were prepared to stand up in their party room and say to the minister of the day, 'We don't support this legislation.' What they did was simply not come in to this place and defend it. It is unusual because, when members of any party support legislation, there are always several who will come in here and put the case one way or another. Clearly, they know that they cannot sustain a credible argument with respect to supporting this legislation.

The crux of the Fair Entitlement Guarantee Amendment Bill 2014 is that it caps redundancy payments, which are currently set at four weeks pay for each year of service, to a maximum of 16 weeks pay regardless of the number of years a person has worked. Effectively, it does not matter whether you have worked at a workplace for one year or 30 years; if you are made redundant, under the new entitlements your payment will be capped at 16 weeks pay.

The Fair Entitlements Guarantee legislation was brought in by Labor in 2012 to, quite properly, protect workers' income if workers are made redundant. Since 2007, mainly under Labor, I understand some $852 million has been paid to some 70,000 employees around Australia who fit the criteria. The legislation that Labor introduced in 2012 replaced the General Employee Entitlements and Redundancy Scheme, otherwise known as GEERS, that had previously been put in place.

The problem with GEERS was that it was not secured by legislation. It was essentially a scheme operated by a federal government department and, therefore, the government of the day, without bringing changes to parliament, could either amend or dismantle the scheme at any time. The Abbott government, through this bill, seeks to do just that—that is, to amend the scheme by reducing the safety net provided to workers under Labor's legislation. In this case it has to argue its case here in the parliament, and it has failed to do so.

The change, in my view, is a direct attack on Australian workers who lose their jobs, because it will cut their payout and by doing so drive down employment conditions and employment entitlements. It is, indeed, another step in the Abbott government strategy of driving down wages and other workplace entitlements—make no mistake about that. The term 'Work Choices' has been removed from the Abbott government's script but the ideology and the determination are still alive and well. We have seen that with the easing of restrictions on 457 visa holders, the proposed shipping reforms and changes to welfare payments, including the six-month waiting period. They are all part of the Abbott government's strategy of driving down labour costs and delivering for their big business friends. Not surprisingly, there was no mention of these changes by the Abbott government prior to the 2013 election. On the contrary, the Abbott government went to great lengths to dispel any fears about changes to Australia's industrial relations system if the Abbott government were elected.

I want to turn to why this change is grossly unfair. Based on the current calculation of four weeks of pay for each year of service, the proposed 16 weeks of pay equates to four years of employment service. That is not only unfair but unjust to a person who has given much more than four years of service and in some cases decades of service to their employer. The longer a person has been with a company the greater the investment that that person has made to the company. Tying the payment to years of service, therefore, recognises and rewards an employee for their personal investment in the business.

It may also be the case that a person who has spent long periods in one workplace will find it more difficult to transition to an alternative job and therefore will be unemployed for much longer. Of course, a worker who has been in a workplace for a long period—perhaps even decades—it is very likely to be a mature aged worker who then, because of age, will find it more difficult to secure another job. That is why governments have had to implement additional measures to assist mature aged workers who want to get back into the workforce.

So this policy will disproportionately affect older Australians. We know that older Australians today are finding it harder than ever before to get back into the workforce. We also know that employers look at younger employees when they recruit. Yet the people who are likely to be most disadvantaged as a result of these changes are the people who are going to find it the hardest to get back into the workforce if they are made redundant. That is why this legislation is totally unfair and unjust.

I want to come to another aspect of this legislation because I believe there is another more devious objective of this legislation. The Abbott government has turned its back on the automotive sector in Australia and on manufacturing more broadly. The statistics show that some 42 per cent of redundancy payments made to date have been made to workers who have exited the manufacturing sector. So, based on those figures and on what is happening in manufacturing more broadly across the country, one would expect that that trend not only will continue but in fact may increase. The government knows that, as a result of abandoning the automotive sector, the full effects of the decisions already made and the policies that this government have brought in to abandon manufacturers have not been fully felt but they will be in the coming years, when we expect tens of thousands of workers to lose their jobs. Indeed, one report suggests that the flow-on effect from those people employed directly and indirectly in the manufacturing sector—all those who depend on the manufacturing sector for their livelihood—could mean that up to 200,000 jobs across the country will be lost.

Workers in some of those areas may have workplace agreements and may be entitled to and may receive the payments they rightly deserve if they are made redundant, but I suspect that there will be many other workers who have no such agreements in place and will be very much dependent on the payments made under the FEGS for the compensation they rightfully deserve if they are laid off in the future. I am not referring to the workers at Ford, Toyota and Holden, because I expect they have secure workplace agreements in place and will have arrangements with those three companies to get their proper redundancy payments, but there will be many others who simply will not.

Only yesterday I spoke with a person who was very much concerned about a small business—it is a small cafeteria-delicatessen business—that relies solely on the automotive plant at Holden. That person told me that that business is likely to go down when Holden closes. I wonder whether the employees of that business will have any cover whatsoever—and is it not people like that that will be looking for this scheme in order to get their rightful payments?

This legislation, which changes the system, will deny those people their rightful payments. And, given that we are likely to see tens of thousands, if not hundreds of thousands, of people in the manufacturing sector lose their jobs over the years ahead, his legislation in my view is very carefully and deceitfully set up to avoid the government having to pay out the money that it would otherwise have to do, knowing in anticipation that those payments are likely to increase as a result of decisions that the Abbott government has chosen to make, and those decisions being that they have chosen to abandon car making in this country.

It is true that the government will make some budget savings as a result of this measure. I have heard the single member opposite who came into the chamber to try to defend the legislation make the point that this is also a budget savings measure and that we should expect the government to try to get the budget back into credit and so on. Since coming to office this government has created its own budget mess through its own incompetence. It has added $68 billion of debt through its own spending decisions and its own policy decisions. Independent analysts have confirmed that. Consistent with the Abbott government's ideology, it wants to have low-income Australians get the budget back in the black. It is saying it has a budget problem. That is quite untrue. There is a budget deficit. There is no budget emergency or any major budget problem. Nevertheless, there is a budget debt. But what the Abbott government wants to do is, through this measure, add to the measures it has already embarked on, and that is to put most of the burden of getting the budget back into the black on low-income Australians. We have seen it through the attack on the elderly, we have seen through the attack on the sick, the unemployed and low-income wage earners. Now we are seeing it through an attack on workers who might lose their jobs through no fault of their own. It is also interesting to note that this proposal comes from of the Abbott government's so-called audit committee—their hand-picked audit committee, who themselves were paid $1,500 a day but do not believe that workers who are made redundant are entitled to a fair payment for themselves.

Today there is no certainty for any worker, regardless of where they work. We saw that very, very clearly as a result of the global financial crisis, where the events in one country cascaded right around the world. We also know that there are unethical business operators who quite deliberately and quite calculatedly are prepared to let their businesses go down and they in turn manipulate the funds in a way they personally still come out of it all right. I have spoken to people who have been entitled to these kinds of payments who have worked for such employers. That is not to say that all employers like that, because most of them are definitely not. But there are. So we need to accept that governments have a role to play in ensuring that, if a worker loses their job through no fault of their own, they are at least paid their rightful entitlements. That is what the fair entitlements guarantee does and what GEERS did previously to that.

The last point I make in the minute or so that I have left is this: if the government is genuinely concerned about trying to balance its budget, rather than attacking workers, as it is doing through this legislation, why doesn't it look to the $1.1 billion of tax loopholes that it has been prepared to cast aside that Labor had proposed prior to the 2013 election and look at raising money through those measures? Whilst the government comes in and criticises Labor for not having implemented those measures, at least they are proposals that the government could and should be looking at right now as alternatives. And why doesn't the government look at those 200 businesses around Australia who are paying minimal tax when other taxpayers are paying their full share of tax and workers are now being asked to lose entitlements that they are rightfully entitled to? Labor opposes this measure and certainly I do, too.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I am opposed to the passage of this bill quite simply because it is unfair. It impacts on vulnerable employees and it cuts community standards of entitlement in the case of redundancy payments, payments for unpaid annual leave, unpaid wages, unpaid superannuation in the case of a company or an employer going broke—becoming bankrupt or having a company liquidated. It unfairly impacts on the most vulnerable in our community. The bill should not pass in the form that it is in.

Some years ago I represented a greenkeeper who worked for a local bowling club. This particular greenkeeper had worked for this club diligently for 18 years. He had done his apprenticeship with the club. He had spent basically all his working life as a dedicated and loyal employee of the local bowling club. He found out that the club was in financial trouble and eventually the club was liquidated. Of course, then it was discovered that the club had some big debts—and, naturally, under Australian law, the principal creditors were the banks! So the banks took most of the money. There was very little left for the employees. So here you had a greenkeeper that had worked for the particular local bowling club for most of his life—for 18 years of loyal service—he had a young family with kids and he got nothing. He got nothing, at the end of the day, after the company had been liquidated and paid its debts. This is a person who had accumulated pro rata long service leave. He was eligible for the 13 weeks of long service leave that accrues to a person on a pro rata basis, after 10 years of service, under New South Wales law. Had he left or been dismissed under normal circumstances, or left because of illness or injury, he would have been paid that long service leave as a pro rata payment. It is an entitlement of that person. And let me tell you: it was a hell of a lot more than 16 weeks worth of pay. He had annual leave owing to him for the years he had worked for the bowling club. Under normal circumstances he would have been entitled to a redundancy payment somewhere in the vicinity of at least two weeks per year of service at the time; the community standard was probably three weeks worth of service. His superannuation, he found out later on, had not been paid for months. He got close to nothing. What is the maximum he would be awarded under the scheme this parliament is about to pass here, under a Liberal Abbott government? The maximum would be sixteen weeks payment instead of all those entitlements he would have got under normal circumstances. He worked there for 18 years. That is less than one week per year of service.

In my book that is simply not fair. I do not think it is fair in anyone's book. I dare anyone on that side of the parliament to get up and say what they are putting through here is fair for a person like that, who had worked loyally for a company for 18 years—particularly given that, if we lose our jobs here or are voted out, we get a hell of a lot more than 16 weeks as a minimum redundancy payment. Why should we get something the average Australian is not entitled to under this legislative change we are making tonight? We are going to say to the people of Australia: 'Well, it's okay for us politicians. We'll get three months worth of pay.' I think the minimum entitlement is $30,000 if you are voted out and lose your seat at an election; but we are going to cut the entitlement for every other Australian back to a maximum entitlement of 16 weeks should the company go bust and be liquidated with nothing there for them. That is simply not fair.

I am not going to be part of that. I am not going to put my hand up and say, 'It's okay for us to continue to get our entitlements in the form of redundancy—up to $30,000—but we're going to cut the money back for other employees.' That is simply not fair and that is why Labor, when we were in government, introduced the Fair Entitlements Guarantee which replaced the GEER scheme. The GEER scheme was originally an initiative of the Howard government but, again, it was only a minimum entitlement and it did not cover community standards. When Labor came to government we ensured that the scheme was amended to reflect community standards, and the community standard enshrined in the legislation was up to 13 weeks of unpaid wages; annual leave payments; long service leave accrued; payment in lieu of notice to a maximum of five weeks; and a redundancy payment of a maximum of four weeks per year of service. That is what the community standard is. That is what ordinary employees in most jobs, if they lose their job and the company is liquid, will get as a severance payment. It is a fair standard and it is what Labor enshrined in the legislation. This scheme being introduced by the Abbott government cuts that community standard, that fair entitlement, back to a maximum of 16 weeks payment in total. That is unfair. It is below the community standard.

Going back to the greenkeeper—the example I mentioned earlier—a person who has given 18 years of service getting 16 weeks payment is simply unfair. What does this reform do?

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I seek to intervene.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

Is the member for Kingsford Smith willing to give way?

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

No, I am not. It cuts the entitlement from the community standard of four weeks per year of service to a maximum of 16 weeks. This is consistent with the national employment standards. Those opposite do not understand that the national employment standards are a legislated minimum. You cannot go below it in Australia. It is what is considered enough to ensure people stay out of poverty in this country and it is enshrined in the Fair Work legislation. But the community standard is well above that and Labor, when in government, sought to cement that community standard.

Going back to the greenkeeper with 18 years service—he had served his apprenticeship—what would he receive under the coalition scheme? Sixteen weeks—less than one week for each year of service. That is what those opposite are voting for. That is what the Abbott government is implementing here—something that is well below the community standard. They are voting to cut a worker's entitlement to a fair payment in case of bankruptcy. It is generally the most vulnerable we are talking about here. It is generally those employees who are not unionised; they are not covered by a union enterprise agreement which sets a community standard. They are the most vulnerable people when a company is liquidated or going bankrupt, and they need support. Generally, there are circumstances where they are not only owed accrued entitlements but also wages. They may not have been paid for the last month and certainly, in many circumstances I have uncovered, they have not been paid superannuation for some months. What support are they going to get from the government? Sixteen weeks payment as a maximum. That is simply unacceptable; it is unfair. The galling thing about this is that, again, it was not mentioned before the election. There was no indication from the Abbott government prior to the election or during the election campaign—when industrial relations and workplace relations were quite topical issues—that they were going to make changes to workers' pay and conditions that affected the minimum entitlement of workers in the circumstances of bankruptcy or liquidation of the company. Again, as previous Labor speakers have mentioned, unfortunately this comes about as a result of the Commission of Audit and the recommendations of the Commission of Audit, which have been found to be grossly unfair and unfortunately form the basis of much of this government's very unpopular budget initiatives.

So that is where this comes from. It was not an election commitment. It was not disclosed to Australian employees, particularly to those vulnerable employees throughout the country, prior to the election campaign. That is why it must be opposed by this House. It is unfair in the way it works. It reduces what are fair entitlements to employees who are vulnerable in circumstances where companies go bankrupt, where companies are trading in circumstances where they are not liquid, where companies are trading in circumstances in breach of Corporations Law, and where the creditors—generally the banks—rank before employees. In those circumstances many employees are left with nothing. They rely on government. They rely on us in this place to offer them a scheme that is fair and reasonable. That was the basis of Labor's reforms in 2012. Over $852,000 in unpaid entitlements to more than 70,000 employees around the country were made under this scheme. That was a fair scheme that was in accordance with community standards. It is now being cut by this government.

Again, I go back to the example that I made earlier: what right do we have to tell the workers of this country, employees in vulnerable situations—many of them women—that they should have their entitlement to fair payments in cases of bankruptcy and liquidation of companies cut back to a maximum of 16 weeks, when we are going to continue in this place to receive the entitlements that we get if we are made redundant, which by community standards are probably quite generous. I will not be part of that, nor should anyone in this place. That is why this bill should not pass.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

The Fair Entitlements Guarantee Amendment Bill 2014 is very disturbing legislation. This is legislation that attacks families and this is legislation that attacks workers. This is bad legislation. It is legislation that goes to the heart of what we as a fair society should be. The legislation is yet another attack on workers, on their entitlements and on their conditions. This is yet another ideologically driven assault on workers that has been proposed by big business, the Business Council of Australia, and the Commission of Audit, all organisations that do not care and have no commitment to the workers in our country. To be quite frank, if big business cared for their workers, it would be a much better place because the level of productivity would increase. You need a company and a government that has a commitment to those people who work for you. They are part of your family. Unfortunately, this government does not view workers as being part of its family, rather it portrays them as being the enemy—those who need to be undermined and those who do not deserve the protection that legislation can afford them.

This government said one thing before the election and another thing after the election. I know that no-one in Australia, particularly no-one on this side of the parliament, will be surprised by that because on absolutely every issue of major importance this government has been found wanting. Time and time again, it has demonstrated just how little commitment it has to maintaining its promises and maintaining what it said before the election and after the election. Before the election, Minister Abetz, guaranteed that there would be no assault on workers' conditions and entitlements. There was absolutely no indication before the election that this legislation was waiting in the wings.

The Fair Entitlements Guarantee, or FEG, is legislation which is legislating a safety net scheme of last resort that covers certain unpaid employment entitlements when employees lose their jobs through the liquidation or bankruptcy of their employer. The first legislation we had in this area was GEERS, which was generated when National Textiles went into liquidation. I tended to call that the Stan Howard legislation. GEERS was replaced by a much fairer scheme when Labor was in power, and that is the current scheme. It provides up to 13 weeks of unpaid wages, annual leave, long-service leave, pay in lieu of notice with a maximum of five weeks, and redundancy pay of a maximum of four weeks per year of service.

It is important to realise that when a person loses their job under these circumstances, it is very difficult to find another job. We only have to look to the automobile industry to see the problems that will exist for those workers who become redundant to understand just how difficult it will be for many of those workers who have worked in industries for very long periods of time. If a person has been working in an industry for 20 years, under the current scheme their entitlement would be much greater than their entitlement under this legislation that we are debating tonight which provides capped assistance for redundant pay entitlements to a threshold of 16 weeks pay and aligns the payment with the maximum payable under the National Employment Standards. This is a sinister, it is callous, it is unfair and it is going to really crush some workers.

These are people who have mortgages to pay, they have kids who are going to school, they need to put food on the table and they need to look to some certainty. But when this legislation comes in it will reduce their entitlements enormously. It is a cost-saving exercise by this government—by a government that has absolutely no commitment to or value for workers. It really stands condemned. The government states that it will save $618.5 million over eight years by terminating the Automotive Transformation Scheme from January 2018. But this also includes a number of harsh cuts.

This government has demonstrated through the way they handled the issues surrounding the automotive industry that they have no commitment to jobs and they have absolutely no job plan whatsoever. When it comes to manufacturing jobs, the only issue that they see is how they can abrogate their responsibility. They have absolutely no qualms whatsoever about seeing jobs going offshore and overseas. The government really does stand condemned.

Labor is very proud of the fact that since 2007 unpaid workers' entitlements have been paid to over 70,000 employees around the country. I have a feeling that this is something those on the other side of this House would be much happier about if it had not happened, because they do not have this same commitment to workers. They do not value workers. They do not really believe, as I have already stated, that we need to have a job plan in place—a plan that is going to set out where we as a nation wish to go as far as jobs are concerned.

It is all very well, standing up in this parliament and spruiking on the airwaves that they are going to create one million new jobs. But in actual fact, unemployment is over six per cent. I do not believe that those on the other side of this House have an answer to this. They have already demonstrated how their actions in the area of jobs and managing the economy is bad for our economy. And this unfair budget, which they have still been unable to get through the Senate is really undermining confidence in our economy. It is leading to massive cuts to industry investment and to education and training, and these have all led to this undermining of confidence within our economy.

This is a government of broken promises. As I mentioned, the government made absolutely no mention of changes to the FEG before the election. Despite telling voters before the election that there would be no changes to workers' pay and condition, the government is slowly eroding our industrial relations system. It is a government that is committed to WorkChoices; it is a government that is surreptitiously undermining workers' pay, conditions and entitlements. This legislation does just that: it undermines workers' entitlements.

Those on the other side of this parliament may one day find themselves in a situation where they need to look to this legislation to provide them with protection. They may be in a situation where they have a young family that really needs some certainty about income. They may be in a situation where they need training to be able to find new employment. Or they may have a family member—a child—in the future who finds themselves in this situation. And if there is inadequate protection there and inadequate financial support then it increases the burden twofold.

As I said, we have been very proud of our $852 million unpaid entitlements scheme that we introduced and which benefited 70,000 workers. The government's plan to cut this scheme will have a greater effect on older workers. On one hand, this government has introduced legislation to increase the age of working people before they are entitled to receive a pension. Then, on the other hand, it is putting in place legislation like this that will disproportionately affect older workers. The proposed changes are at odds with the government's other policy. The government cannot argue one thing in relation to one piece of legislation and then another thing in relation to this legislation that we have before us today. It is one thing and one thing only: it is an ideological assault on workers and their families. It is unfair, it is unjust, it is inequitable and it is unconscionable. It cannot be supported by this parliament.

It is certainly something that I will not be voting for and I know that members on this side of the parliament know just how unfair it is and how hard it is—how difficult it is—for older Australians to get back into the workforce. It is particularly difficult in areas such as manufacturing, automotive—well automotive is going to be non-existent very soon thanks to the actions of this government—textiles, and timber and wood product industries. The actions of this side of parliament show we are absolutely focused on assisting people to obtain employment; we are committed to finding ways to help people, not to drag them down as this legislation does.

This is legislation that really demonstrates that the government has absolutely no commitment to Australian workers. Instead of admonishing hard-working Australians, the Abbott government should be getting on with articulating its job plan. As I have already highlighted, a job plan is non-existent when it comes to the Abbott government. It is a government of rhetoric, it is a government of blame, it is a government of abrogating its responsibility, it is a government of broken promises, it is a government that is still acting as if it is in opposition as opposed to a government that is governing for all of Australia and developing policies that will show leadership and prepare Australia for this 21st century. The simple fact that our unemployment rate is going up, as I have already mentioned, can be attributed to the fact that this government has no vision for Australia, no jobs plan.

This legislation is unfair. This legislation promotes something that is totally different to what the government was saying, in opposition, before the election. This legislation is proof that the Abbott government is hell-bent on duping the Australian people. It is a government that distorts information; it is a government that is unfair; it is a government that has introduced this Fair Entitlements Guarantee Amendment Bill 2014, which will penalise Australian workers; and it is a government that has absolutely no vision and sets up a scenario that gives those people, those workers who lose their jobs under a company going into liquidation, absolutely no hope for the future.

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

It is always a pleasure to follow the member for Shortland. She made, as usual, a fine contribution and I know that because I heard those opposite getting irate during it. I wish I could say it is a pleasure to speak on this bill, the Fair Entitlements Guarantee Amendment Bill 2014, but of course it is not a pleasure to speak on a bill that cuts workers entitlements and caps redundancy pay—in this case at 16 weeks. This follows recommendations by the Commission of Audit—not a progressive commission, but a regressive commission—on a whole range of things like the privatisation of Australian Hearing and basically taking us back in time, in relation to the Federation, with big cuts to health and education spending and the like. It was a reactionary Commission of Audit, and you can see that expressed here in legislation by the government following its directions.

This bill will have a particular effect on mature aged workers and on long-serving employees, and particularly for people who have served a long time in industries that are precarious or with employers who hover just on the right side of bankruptcy—or the wrong side, as it were. This is a bill that the whole of Australia should be aware of, should be concerned about and should be worried about because it goes to the issue of fairness in our country. It goes to the issue of fairness and workers' entitlements. One of the ways we mark what kind of society we are is how we treat workers, not just with their wages but also with their entitlements. And for many of the workers I have dealt with during my time as an official of a union, their entitlements constitute a significant part of their savings, other than their superannuation, so it is a very important issue indeed to discuss.

In South Australia, the auto industry has been put to the sword by this government. We all remember how, on 11 December, the Treasurer in the Financial Review, the top financial paper in this country, dared General Motors to leave. Of course General Motors workers have good redundancy provisions in their agreements, but there are many people in the car industry who work for small component manufacturers and we have seen in many cases in the past that those people are reliant on GEERS for their entitlements if their employers liquidate or go to the wall.

For second-tier component suppliers in particular there is a real issue at the moment. Their main hub of the automotive industry has been, in the government's own words, 'dared to leave'. This industry has taken that decision and we now have the closing down of the industry by 2017. For many of the second-tier suppliers, this creates a very typical set of circumstances because, as we will see with a bill later on in the parliament, the Automotive Transformation Scheme bill, the government intends to cut $500 million out of assistance to the automotive industry and that threatens to hasten the closure plans of the industry. That is because directors of these companies have responsibilities to banks and to landlords to not trade when insolvent and the like, and so those directors will obviously have a difficult set of circumstances if this cut to the Automotive Transformation Scheme goes through.

It is just part of the neglect and the malice that is shown by this government to the automotive industry. So anybody who is concerned about those workers, those hard-working Australians—and there are about 10,000 of them in South Australia and another 20,000 in Victoria—should be concerned about this bill. Anybody who is concerned about mature age workers should be concerned about this bill. And anybody who is concerned about long-serving employees should also be concerned about this bill.

It is impossible to discuss this bill without going back in time. I do not know whether you were here, Deputy Speaker Vasta, in the year 2000, but obviously we have to go back to the Howard government, to a time when Tony Abbott was the workplace relations minister, to find the origins of the GEER Scheme. While I do not want to be unnecessarily insensitive or anything like that, when we look at the establishment of the GEER Scheme, it was triggered by what happened at the National Textiles firm. That firm, which had a famous director through his association with the then Prime Minister, had a dramatic effect on the way we discuss entitlements. All of a sudden, there were a hundred or so workers who had lost their entitlements and people put two and two together, I guess, that it should be the government's responsibility to safeguard entitlements of workers. That was the origin of the GEER Scheme.

At the time, we also had the collapse of Ansett. The collapse of Ansett also had a dramatic effect on the community's thinking about entitlements. Up until that point you might have had a local deli close—and in my case I saw a supermarket close in Elizabeth South in my electorate. In those days I was a union official. Those people lost their entitlement but there was no hue and cry, no national media attention, just an attentive union official, but there is only so much you could do against a liquidated firm. So it was really National Textiles on one hand that focused the community's attention—and I think that it focused the government's attention in a very serious way at that time—and the failure of Ansett and, of course, many people of Ansett had longstanding entitlements that extended well beyond 16 weeks.

The government chose in the National Textiles arrangement to make a special arrangement for those workers, one that had not been made for workers in similar situations preceding that.

Mr Briggs interjecting—

We will get to that. In Ansett's case, we had a levy on airline tickets, on consumers, to cover entitlements—a very interesting arrangement. The member for Mayo interjects and wonders what we might do. I am just going through the history of how this scheme originated, that's all, just talking a few facts here. When you talk about this scheme, I will not deny that it was a flaw that Australia, for all those years up until this point, had not talked about securing workers' entitlements in the event of bankruptcy or liquidation. Of course it was a flaw. There is no great secret there. The member for Mayo asked questions.

But when you have the member for Hume in here talking about moral hazard and frothing up there on the backbenches—it must be his audition for Assistant Treasurer, I guess. My money is on Mr Nikolic. I think that he would make a fine Assistant Treasurer. It would get him off the backbench and we would see a bit of fight in the government.

But it is interesting to note that when they came to set up these schemes, in Ansett's case the then government looked at slugging consumers in the first instance, and their second choice was to slug the taxpayer. If people are going to get up in this parliament like the member for Hume—

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I seek your guidance. Under standing order 74, reflections on votes of the House and previous proceedings of the House, and standing order 90, reflections on members and imputations potentially of improper motives, I just seek your guidance whether the member for Wakefield might be skating close to the edge on those two points of order.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

I think the member for Wakefield is in order at the moment but I ask him to just make sure that he does not get too close to breaching those standing orders.

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

I am not impugning anybody's motives. I am just saying that if you are going to get up and raise moral hazard in the House as an argument then you cannot say—

Mr Nikolic interjecting—

You can reflect on government decisions. You cannot erase history. The member for Bass wants to erase history. You would be interested to hear what Peter Reith said at the time about the creation of this scheme. The Age on 11 July 2012 reported:

Peter Reith, who preceded Mr Abbott as federal workplace minister, said the scheme was always fraught with moral hazard—a tendency to take undue risks when someone else is bearing the cost.

''The government went into it with its eyes open,'' Mr Reith said. ''I was a party to it, but I wouldn't describe it as my best moment.''

He takes responsibility in that instance for the creation of GEERS. He was the minister preceding Mr Abbott—

Mr Briggs interjecting—

Really? So there you go. In any event, what we have is a system that was created by those opposite. So when the member for Hume comes in here and talks about moral hazard and points the finger at the Labor Party, you are left a bit perplexed. He must be the only Rhodes scholar who has the memory span of a goldfish. He has gone around the bowl a couple of times and has forgotten exactly whose creation this was. The Labor Party at the time had a very, very different approach to dealing with this issue, an approach that did not have those moral hazard implications.

Labor opposes the reduction in these schemes, but you do have to be concerned, I guess, about the behaviour of some employers. On 14 July this year, the Age reported how a Wangaratta textile maker had restructured their corporate arrangements so as to shift assets around to avoid paying the entitlements of employees, in effect, sending a dollar bill shelf company to the wall. That left the taxpayer holding the bag, as it were. It left GEERS holding those entitlements. We should be concerned about that sort of corporate behaviour and we need to be cognisant of it if we are to have the taxpayer paying these entitlements. But let us not have any humbug in this House. Let us not have those opposite try and erase history and come in here and talk about moral hazard.

Ultimately this is a policy that is born of, in the first instance, indifference to workers and, in the second instance, hypersensitivity to politics—and those opposite know it; they may shrug their heads, but that is the case. If there are flaws in the scheme then do not sheet them home to workers. Do not get stuck in to some mature-age worker who has got all of their savings locked up in their entitlements—annual leave and the redundancy payments that they might get—and will have trouble getting another job in what is a very difficult job market. Do not blame them or cap their entitlements. Have a look yourself, the way you make decisions and the way you set these things up.

The member for Mayo, opposite, is relaxing back. When he designed Work Choices, it was coherent. You could see it. It was all about cutting people's wages. It was all about little Billy. Was it little Billy who lost his penalty rates? Well, here we have Billy's dad losing his entitlements. That is the reality of this bill. Labor always sought to make this scheme fairer. We always sought to make it more just. We will oppose this attack on workers' entitlements as we should. No amount of airbrushing by the member for Bass, no amount of points of order and shaking of heads by those opposite, will change that fact. Labor will oppose this bill because it is bad policy.

Luke Hartsuyker (Cowper, National Party, Assistant Minister for Employment) Share this | Link to this | Hansard source

I take this opportunity to thank members who spoke on the Fair Entitlements Guarantee Amendment Bill 2014. Before I turn to the bill itself I would like to clear up a few misleading points that have been raised by the members opposite. The member for Gorton claims that the FEG is under attack. This is not the case at all. The government supports FEG but, to ensure its future, this bill makes the FEG scheme sustainable. Sustainability of the FEG scheme is crucial—and this is something that the member for Hume raised in what I believe was the best contribution to this debate. The member for Fowler continued the Labor Party's scaremongering campaign saying this bill strips entitlements from workers. This is simply not true. Nothing in this bill strips workers' entitlements. Workers can continue to gain access to all entitlements, including those not already covered by the Fair Entitlements Guarantee Act, through the normal winding up processes.

What this bill does say is that the taxpayer should only be responsible to pay entitlements up to the community standard of 16 weeks. This is one thing that has been missing from the opposition in this debate—the fact that Labor's Fair Work Act and the National Employment Standards set the maximum redundancy amount payable at 16 weeks. If 16 weeks is good enough for the Fair Work Act, why is it not good enough for the Fair Entitlements Guarantee? This bill does not change entitlements; it merely sets the safety net at 16 weeks, in line with the National Employment Standards. The government is committed to ensuring the future sustainability of the Fair Entitlements Guarantee. The scheme provides vital financial assistance to Australian workers who lose their accrued employment entitlements as a result of the liquidation or bankruptcy of their employer. The bill implements an essential budgetary measure needed to ensure that this protection for employees' entitlements can continue.

Demand for assistance under the scheme has increased over the years with a corresponding escalation in costs. These costs cannot be sustained and so it is essential that the changes are made now so that the scheme can remain in place over future years. Reinstating a 16-week cap on the amount of redundancy pay that can be paid under the scheme aligns payments with the maximum amount payable under the National Employment Standards. As well as securing the sustainability of the Fair Entitlements Scheme, this will ensure that redundancy payments made under the scheme are in line with the community standard; and it will remove the moral hazard that can exist where the employer, rather than the employee, comes to rely on the Fair Entitlements Guarantee as a way to ensure their employer obligations are met.

I reiterate that this bill does not reduce employee entitlements or change the amounts employees can pursue through the winding up process. The 16-week cap applies only to the redundancy component of an employee's entitlements. The Fair Entitlements Guarantee will continue to provide protection for all annual leave and long service leave entitlements accrued by an employee, subject to the maximum weekly wage cap. The 16-week cap will apply to employer liquidations and bankruptcies that occur on or after 1 January 2015.

The bill has also clarified the Fair Entitlements Guarantee legislation to make clear that, firstly, payments can be made to the estate of a deceased employee or claimant; secondly, a debt owed by a claimant for a particular entitlement can be offset proportionally against other entitlements payable to the claimant under the scheme if the debt exceeds the entitlement to which it relates; and, thirdly, amounts required to be withheld by law, such as pay-as-you-go taxation, will be deducted from payments when they are made to the claimant.

The bill also amends the act so that the issue of whether a person has reasonably pursued a debt owed by the employer is not a consideration for eligibility for each category of employee entitlement covered under the scheme. This will now be more properly considered when calculating the amount a claimant is owed.

Finally, the bill establishes arrangements for costs associated with appeals to the Administrative Appeals Tribunal to be drawn from the special appropriation. This amendment will take effect form 1 July 2015 to align with the commencement of the new financial year. This bill is an important step in securing the future of the Fair Entitlements Guarantee and ensuring employees are protected when their employers fail in their responsibility to meet the cost of their employees. It addresses the increasing costs being borne by the scheme and paves the way for greater sustainability into the future. This bill does not strip entitlements; rather it protects a scheme and aligns the redundancy payments in the Fair Entitlements Guarantee safety net to existing community standards. I commend the bill to the House.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

The question is that this bill be now read a second time. There being more than one voice calling for a division, in accordance with standing order 133(b) the division is deferred until 8 pm.

Debate adjourned.