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

24 October 2018

 I rise to speak on the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018. I'm pleased to see the government implementing a Labor initiative to protect workers' entitlements. The Fair Entitlements Guarantee scheme, or the FEG, is an important scheme that ensures workers cannot lose hard-earned pay that they have accrued over time and have not had the chance to materialise. They are entitlements that are often put at risk when a company or business fails. The FEG is a safety net as a guaranteed way for employees to be paid their entitlements in a timely manner. In 2012, Labor passed the Fair Entitlements Guarantee legislation, which delivered the strongest protections for workers' entitlements ever seen in this country. We legislated because Labor is the party of jobs and Labor is the party for workers. In contrast, the government actually tried to cut the FEG in 2014. It has no real commitment to protecting workers' entitlements. These entitlements—like long service leave and accrued annual leave—belong to the workers. They are, for all intents and purposes, part of their wages and conditions that, once earned, should not be taken away from them or kept at bay by long and complicated processes.

From my experience in the union movement, both at the nurses' union and the ACTU, I have too often seen workers left bereft when the company they work for goes under and they lose their job. They often had absolutely no idea that their job was even at risk. To lose your job and all you have accrued in good faith is devastating, and to go through weeks, months or years of legal proceedings to try to recover the loss too often means getting very little or nothing of what you are owed. But, even more galling than that, is for those workers to discover that the loss of their entitlements had been engineered by their employer as an egregious act designed deliberately to deprive their workers of what is rightly theirs. That's right: as unbelievable as this sounds, some employers devise schemes to avoid paying their workers what is owed to them. Imagine how those workers feel when they see their ex-bosses opening up another business—often identical in nature, and even with the same directors, but under a different name and guise. This is known, of course, as phoenixing. No industry is safe from this. I have met workers who have lost entitlements in this way in aged care, manufacturing, hospitality, construction, the beauty industry and more. Low-paid workers who can least afford to lose a single cent should not go through this. And yes, better-paid workers, too, find themselves in dire straits trying to pay mortgages and meet commitments made under the assumption of having a decent job. Losing thousands of dollars, or even hundreds of dollars, in this way can break a family. It puts strain on stretched budgets and breaks dreams. It's hard to imagine what sort of person would deliberately deprive their employees like that. But that type of person, sadly, exists out there—way too many of them.

Labor understands the importance of protecting such entitlements. We understand the impact on workers losing their hard-earned pay, not only financially but mentally as well. So many workers have suffered stress, anxiety and depression at the hands of unscrupulous employers. It is most unusual for this government to put on the table a bill that, while falling short on some measures, does actually have some benefit to workers, because it is the nature of this government to attack workers and workers' rights every chance it gets. This government has done its best to attack workers' rights, like the right to be represented by a union and the right of the unions to properly represent and fight for their members; the right to have their superannuation protected from the greedy banks; and the right to be paid penalty rates.

Under this government, wages have stagnated, threatening livelihoods and our economy. Some jobs simply do not pay enough to give anyone a decent life. A job that doesn't give you a living is not a job; it is exploitation. Under this government, underemployment has grown, with workers needing more work to survive. Zero contract hours, casual employment and short-term contracts all add up to people living anxious lives, with little hope of planning for the future. Under this government, the use of the shadow economy is rife. We have exploited migrant workers with the sickle of deportation hung over their head, being forced to accept below-award wages, working long hours, being harassed and being charged exorbitant amounts of money for things like substandard accommodation and training or not being paid at all.

Under this government, labour hire firms are underbidding for the jobs of longstanding employees who have bargained in good faith for decent wages and conditions. Workers are finding themselves dumped and out of work, replaced by insecure, low-paid and often less-skilled workers employed by labour hire firms at award or close to award rates. In fact, under this government, the number of those working on award rates has increased dramatically, a significant contributor to wage stagnation. Under this government, we have seen good, steady public service jobs disappear by the thousands and, as a result, Australians are finding themselves without the provision of adequate services. Just try to ring Centrelink or NDIS and you'll see the devastation that severe cuts have had on our public services, or ask child protection workers how overworked they are. You may well wonder how we are supposed to stop corporate tax avoidance when the ATO has lost thousands of jobs. Under this government, closing the gender pay gap for working women has languished as a priority. Under this government, accessing child-care payments has been made more difficult for working families. If you have the misfortune to find yourself out of work—like the people this bill is concerned with—heaven help you trying to survive on welfare payments. And so it goes on and on.

This government is not normally concerned with looking after workers. It is more concerned with protecting banks' profits and making sure the big end of town does better and better at the expense of everyone else. So, whilst we acknowledge that some good will come of this bill, we are not under any misconception that the motivation for these amendments are any more than a government trying to protect its own bottom line.

The average annual cost under the FEG scheme has more than tripled, from $70.7 million in the four-year period from 1 July 2005 to 30 June 2009, to $235.3 million between 1 July 2014 and 30 June 2018. According to the government, the startling fact behind these figures is that the increase in FEG claims can be attributed to only a small number of corporations deliberately shifting liability to the scheme. We're pleased to see the changes to Corporations Act contained in this bill which will hopefully see a greater degree of recovery for employees who are owed entitlements and, hopefully, the government will be able to use these new capabilities to recover more taxpayers' money, to replenish the millions of dollars currently being paid out under the FEG scheme.

This bill will strengthen the Corporations Act to better deter and reduce the incidents of dodgy companies and their associates structuring their companies in a way that evades paying employee entitlements and will hopefully deter them deliberately shifting liability for unpaid employee entitlements to the Commonwealth via the Fair Entitlements Guarantee scheme. The bill will amend the Corporations Act to make it easier to prove the criminal offence of entering into an arrangement to avoid paying employee entitlements. It will significantly increase the maximum fine for the offence of entering into an arrangement to avoid paying employee entitlements. It will introduce a new civil penalty provision for avoiding paying entitlements with an objective reasonable person test. It will give the Fair Work Ombudsman, the ATO, and the Department of Jobs and Small Business standing to commence compensation proceedings to recoup monies paid out via the FEG. It will extend the liability for unpaid entitlements to related corporate entities and, importantly, it will extend ASIC's powers to disqualify directors and other officers where they have a track record of corporate contraventions and inappropriately using the Fair Entitlements Guarantee scheme to pay outstanding employee entitlements. Labor believes this bill could be improved to give registered organisations standing to commence civil proceedings under the new provisions for compensation and the recovery of unpaid entitlements.

We are pleased to see the changes to the Corporations Act contained in this bill, that will hopefully see a greater degree of recovery for employees who are owed entitlements—entitlements that are their own hard-earned money. The changes in the bill will also aid the government, who will hopefully be able to use these new capabilities to recover more taxpayers' money, to replenish the millions of dollars currently being paid out under the FEG scheme.

The new financial penalties for the criminal offence are significant both for individuals and for body corporates. This will reinforce the very serious nature of this crime and, hopefully, better deter dodgy bosses from engaging in what is an abhorrent practice of keeping employee entitlements, their hard-earned entitlements, away from those workers. Directors and companies will also be on notice, as they will be made liable for avoiding paying employee entitlements.

While we welcome these changes to the act, we are alive to the motivation of this government in making them, remembering that this government is no friend at all of workers. We also expect that the new measures will indeed be enforced and that resources will be made available to ensure quick and decisive action when offences occur. There is no point in having these new measures if organisations like ASIC and the Australian Taxation Office don't have the means to use them properly—if they don't have the people employed and the resources to follow up these egregious issues. And, whilst this government remains irreparably divided on all manner of issues, from proper climate policy to its own leadership, it remains united in its attacks on workers and workers' rights.

These reforms are only a start of the changes that must be made to wind power back from employers to workers, to restore the great imbalance that exists right now. I am proud to be part of Labor, who in government will do a great deal more to restore that balance, because it is that balance that will make people's lives better.