BILLS; Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018; Second Reading

October 22, 2018

Mr HAYES (FowlerChief Opposition Whip) (19:14): I rise to make a contribution on the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018. From the outset, I support the amendment moved by the shadow minister. Having said that, I find much of this bill contains sensible reforms to the Corporations Act, particularly the measures to deter and punish companies and directors who deliberately avoid the liability for their employees' entitlements, shifting liability to the Commonwealth and through the Fair Entitlements Guarantee scheme. We support that because Labor introduced the Fair Entitlements Guarantee scheme and Labor will always fight to make sure that we protect the integrity of employees' entitlements. So we will protect this scheme.

There are two essential facts to this. Firstly, back in 2012 we passed the Fair Entitlements Guarantee legislation. It was the strongest protection of workers' rights ever seen in this country to guard against companies that lose market share and go bust or that, alternatively, by design, move their assets and become liquidated to rise in another entity but free of having to maintain the entitlements of the original employees that regrettably lost their jobs. So that's why this occurred. Secondly, in 2014 it was this government that attempted to abolish the Fair Entitlements Guarantee scheme. So it shows that they had no real compassion for employees. I understand the statistics to be that something like 20,000 companies fell under this scenario. It's not all that long ago—2014—that they were going to remove this safety net.

You have to ask: why the change of heart? I am glad to see a bill come before us on which I think the government has a reasonable agenda—that is, to ensure that employees' entitlements are being honoured. But what is the primary motivation for it? I think it gets down to cold hard cash. I suspect the primary motivation is the reduction in fiscal costs to the Commonwealth. Liabilities could accrue to the Commonwealth resulting in them having to pay out as opposed to chasing and then forcing dodgy employers to pay the entitlements that employees are due.

I note the explanatory memorandum to this bill talks about the annual costs involved under the FEG scheme. Since 2009, annual costs under this scheme have more than tripled. In the four years to 30 June 2009, the cost was $70.7 million. In the four years to June 2018, the cost increased to $235.3 million. That's a very significant cut to the government's bottom line. There's a motivation there as to why we should not simply sit back when we know there is a prospect that, with a few amendments, we can force employers to pay the appropriate entitlements to employees. Regardless of the motivation, this bill is, nevertheless, protecting the safety net.

The Fair Entitlements Guarantee scheme was designed to be a safety net. It wasn't there to simply pay the entitlements for everybody. Employees' entitlements are the responsibility of the employer. It is to ensure that, for whatever reason a company goes bust, employees are paid in a timely manner and without having to wait for a very long, drawn-out legal process to able to access their entitlements. I think it's probably common ground in this place that, where a firm does go bust for whatever reason, which is always a tragedy—but apart from the tragedy of the firm going under—there are all those people who lose their jobs and all those people who lose their future employment prospects. But, where all those people lose their superannuation, lose their accrued leave and lose unpaid wages, that becomes very, very different.

Within my family, we've been through some of this. One of my sons is a builder. When he was a lot younger, he worked with a very small company. I don't know what the reasons were, but the work dried up. They closed the company down, but there was no money to pay my son. His entitlement was a second-hand drop saw. He left there with nothing in his bank account and nothing to pay for his vehicle or anything like that. He carries a second-hand drop saw because the employer told him that there was no money left. That was certainly before the Fair Entitlements Guarantee scheme, but it shows that these things aren't new. It's been happening for some time. There are people who will restructure their finances and do things like this—or, alternatively, it could be quite legitimate. But, nevertheless, employees can lose out. I would imagine that there would be people on the other side of the House who would probably have a similar experience to that.

There are very clear positives in the provisions of this bill and the way it streamlines and improves the way it acts as a safety net. Part 1 of schedule 1 of the bill amends the act to strengthen the enforcement and recovery options so as to deter and penalise company directors and other persons who engage in or facilitate the transactions that are aimed at preventing or significantly reducing the employer's liability for employees' entitlements in insolvency. What it does is it extends the fault element requirement to initiate criminal proceedings under the act to include 'recklessness' and a significant increasing of the penalties applicable for the entering into arrangements to avoid paying employees' entitlements. It also introduces new civil penalty provisions for avoiding paying employee entitlements, with the objective of the reasonable-person test. I think that, for many, that would be quite significant. But it also extends the standing of parties who can commence compensation proceedings to recoup moneys paid out via the Fair Entitlements Guarantee to the Fair Work Ombudsman, the Australian Taxation Office and the Department of Jobs and Small Business.

As the member for Griffith only just recently said, this bill could be improved by extending it further to incorporate registered organisations, principally trade unions. When you think about it, there are many occupations that are covered by the trade union movement. People of their own volition decide to join a union for one reason—for protection. Unions don't exist under our Constitution. Unions only exist to fulfil a need, and that is the need to protect employees. That's why the unions should have actually been included in this. Expecting unions to recover unpaid wages and expecting unions to chase unpaid entitlements would ordinarily be regarded as the bread and butter of the trade union movement—looking after workers. So you have to ask: why would the government purposefully sideline trade unions? There's got to be a reason for it. You'd have to think it goes something along the lines that they have a very clear view when it comes to the trade union movement. They despise the trade union movement. I don't know why.

The only union I've heard mentioned in this place for some time is the CFMMEU—I hope I got all those letters right! But for all the registered trade unions in this country who do good work looking after their members and ensuring that their members are in safe working conditions and safe environments, I just haven't heard this government yet say one good word—not about the trade union movement let alone individual unions in the trade union movement. That's unless you call the National Farmers' Federation a trade union. I suppose it's a registered organisation. I have heard the government mention the National Farmers' Federation occasionally. But their prejudice about the trade union movement is just taking the debate too far when it comes to protection of entitlements, because they know this is what trade unions do. They are in existence to look after workers.

The fact that the government want to try to sideline unions quite frankly leads one to ask, 'Why would you do that?' But, as I remind my colleagues, you shouldn't get too inquiring about this, because we are talking about those opposite, who are the party of Work Choices. I was around when the conservative government of the day introduced Work Choices. It had such an impact throughout the community. The reason why was that Work Choices made it legal for the first time in Australian history to be able to pay people below the award rates of pay. So that's what it's all about. It's no wonder there was such a revolt against the Howard government in 2007 about these things, because people started to understand that people could be paid less than the award rate of pay. It may not have affected the mums and dads out there who had solid jobs or professionals, but the ones who approached me were the parents and the grandparents worried about kids coming up into such a workforce. They did not like to see the government use an anti-union piece of legislation that could impact adversely on their kids and grandchildren.

This bill, as I said at the start, I think actually goes some distance to try to streamline the provisions that allow for the recovery of unpaid entitlements so they're not coming out of the Commonwealth coffers. It is ensuring that the companies that are directly responsible are the ones that are held liable . Even if they enter into arrangements and become liquidated, it also makes it allowable to chase those directors—effectively to follow the money—to see where the assets went and to go after any other entity that benefited from the exchange of assets. They can, too, be held liable in proceedings for the unpaid entitlements for their employees. That is pretty significant when you think that, at this stage, something like 20,000 companies fall under this scenario.

We want people in business to act honestly and with integrity, as we do employees who work for businesses. This should not be something that we need to be focusing on, but it is a reality. It is something that has occurred and is occurring with a fair degree of repetition. But we should ensure that we do everything we can to discourage this form of objectionable behaviour at a corporate level.