Senator COONAN (10:36 PM) —Earlier this week I was pleased to learn that the federal government would pay 19 former employees of the Victoria Knitting Mills in the Sydney suburb of Alexandria, which is part of my duty electorate of Sydney, at least some of the entitlements owed to them by their former employer who became insolvent. The issue of employee entitlement is one in which I have a particular interest. I have taken a close interest in the plight of workers whose employer goes broke, owing wages and other entitlements, as part of working at the bar in recent years as an insolvency practitioner. It is a matter in which I have both some experience and a particular interest. These 19 workers at Victoria Knitting Mills received more than $70,000 under the federal government's Employee Entitlements Support Scheme—

Senator COONAN —It is a good program, Senator Abetz—a program which provides assistance to employees who have lost their job since 1 January 2000 as a result of their employer's insolvency and who lost some or all of their employee entitlements. It is an example of the federal government leading the way and making a real difference to the lives of ordinary Australian workers who, through no fault of their own, have been affected by the financial failure of their employer.

The government is delivering on the complex issue of employees losing their entitlements following business insolvency and it continues to provide real help to people who need it and who have little to offer but their labour. The liquidator for Victoria Knitting Mills, Mr Geoffrey Reidy, from the firm Rodgers Reidy in Sydney, is distributing the money among the employees. Let me give you a picture of the people who will benefit from this payout. An average payment for each of the 19 claimants is around $3,727, with the highest payout being $8,628. One of these employees worked for the company for 23 years, and eight employees gave more than 15 years service.

By mid-November this year the federal government had paid more than 1,000 workers who were otherwise left without their entitlements when their employer failed. In total, the scheme has now paid out more than $1.8 million. Typically, the federal government scheme has delivered to employees up to 50 per cent of the entitlements owed by their insolvent employer. But workers would have received double what they had been paid under the scheme, sometimes up to 100 per cent of their entitlements, if the states had contributed their fair share to assist workers in need. The contrast is stark. In this case, the Commonwealth is paying these 19 former Victoria Knitting Mills employees an average of almost 40 per cent of their entitlements owing at termination. If the Labor Premier of New South Wales, Mr Bob Carr, cared enough about these workers to pay the New South Wales government share, they would be paid on average about 80 per cent of their entitlements owing at termination.

For 13 years, federal Labor turned its back on these workers. Now it encourages its state counterparts to follow suit, it would appear. During the federal Labor government's 13 years in office, it failed to provide meaningful protection for workers whose entitlements were not paid on insolvency. No more evidence of this failure is required than the plight of the workers who have, since Labor left government, discovered that there were no federal laws or schemes in existence to protect their unpaid entitlements on the insolvency of their employer's business.

Labor's record of inaction is pitiful. No Labor Prime Minister, no Labor cabinet and no Labor industrial relations minister—Mr Willis, Mr Morris, Senator Cook or Mr Brereton—ever succeeded in establishing a national scheme to protect worker entitlements on insolvency. It does not appear that any Labor Prime Minister, Labor cabinet or Labor industrial relations minister paid out one cent of Commonwealth money to fund unpaid entitlements to employees where debts were owed to them by their private sector employer. Labor did not seek the agreement of the states on a proposal for the establishment of a national scheme to protect worker entitlements, despite the existence of a joint federal-state Labor ministers council.

Labor did not even commit to a national scheme to protect worker entitlements in its self-proclaimed accords with the ACTU. During the life of the Labor government there were eight separately negotiated accords with the ACTU. The accord record on employee entitlements speaks for itself: Accord Mark I in 1983—no mention of worker entitlements on insolvency; it was the same for Accord Mark II in 1985 and Accord Mark III in 1987. In Accord Mark IV in 1988 again there was no mention of it. In 1989 there was no mention of it in Accord Mark V. In 1990 there was no mention of it in Accord Mark VI.

In Accord Mark VII in 1993 we got the first mention—after 10 years of government and four days before the 1993 election—of worker entitlements on insolvency. But there was still no commitment to providing a national scheme or a safety net; there was only a modest change to priorities to allow employees to receive payment before the Commissioner of Taxation but, of course, after secured creditors. It was not nearly a solution to the problem. Accord Mark VIII was not much better; it recorded a second mention of worker entitlements on insolvency after eight accords over 13 years. Labor's only commitment to the trade union movement on this was that the government would `examine and, if practicable and desirable, move to improve the protection of employees' entitlements in the event of insolvency of the employer'. In other words, after 13 years of government Labor was not even convinced that it was desirable to do anything about the problem, let alone propose a solution.

Over the period of this inaction, thousands of workers and their families were owed millions of dollars. They went without their entitlements without the Labor government taking action to provide a safety net. The ACTU's own figures estimate that 17,000 workers each year are not paid entitlements on insolvency and that the average amount of money owed to workers who are left with unpaid entitlements on insolvency is $7,000 per person. If this is right—and data is not readily available on this issue—during Labor's 13 years 221,000 workers were left unprotected by Labor, losing some $1.25 billion in unpaid entitlements. Yet virtually nothing was done.

Labor's failure is even more contemptible given that Labor induced an economic recession in 1990 which left nearly a million Australians unemployed and caused thousands of businesses to go into insolvency. Even with the wreckage of recession around it, Labor did not act to protect employee entitlements. Apart from its failed accords with the ACTU, Labor missed other opportunities to deal with the problem. Unfortunately I will not have time to go through them all. Labor's only legislative actions on this issue were in 1985 and 1993. In 1985 the Companies Act was amended to give limited priority to retrenchment payments after unpaid wages and entitlements in respect of annual leave. In 1993 the Corporations Law was amended so that priority for money owed to the Commissioner for Taxation was ranked behind employee entitlements, but this amendment provided no effective solution to the problem because it left employee entitlements ranking behind those of secured creditors.

Every employee during and after Labor's recession who was sacked but owed money when their employer went broke continued to be denied their unpaid entitlements when secured creditors ranked above them. Labor's record in government on protecting employee entitlements exposes the gulf between Labor's rhetoric and practice on workers' rights. We hear a lot about it now but there was not much action when Labor was in a position to do something about it. The Employee Entitlements Support Scheme is the most far reaching extension of the social security safety net undertaken by a government to protect workers who are left stranded when a company fails. It is the only scheme operating to protect workers' entitlements. Workers and their families have every right to vent their disappointment at the states and the federal opposition who left them significantly out of pocket, through no fault of their own. It is an enduring pity that others do not share the coalition government's commitment to working people in need.