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Thursday, 1 March 2012
Page: 2487

Mr BRADBURY (LindsayParliamentary Secretary to the Treasurer) (12:10): I would like to thank all the members who have contributed to this debate on the Corporations Amendment (Phoenixing and Other Measures) Bill 2012, in particular those who have spoken on this side of the chamber with such passion about their determination to ensure that workers, in the event that their company fails and workers' entitlements are not available to be paid, have the opportunity to access the publicly available funds through the GEER Scheme.

There have been a number of contributions from those opposite. I am pleased that the member for North Sydney has joined us. The member for North Sydney led the opposition's offensive on this bill, and I have to say that he was pretty sloppy. You were pretty sloppy, Joe. He commenced his contribution with a number of quotes. He quoted Bob Baxt, a very distinguished individual who is the chairman of the Law Committee of the AICD, and Peter Strong, from COSBOA. These men are both very respected individuals. The difficulty was that the quotes he chose to selectively use were actually taken from evidence given by those two individuals to a parliamentary committee investigating two completely separate bills. The member for North Sydney, rather than confront the issues that are at the heart of this bill, came into this place either to mislead the House by engaging in debate about other matters or, through his own sloppiness, to engage in discussion about completely separate bills.

When it comes to the bill that is before the House, those on this side of the chamber have spoken—I think very passionately and forcefully—about the need to remedy an existing deficiency in the law. I would like to speak about some of the specific examples that have been brought to my attention by members of this place of workers in their electorates who have been, firstly, denied access to their entitlements and, secondly, denied access to the GEER Scheme, the publicly funded opportunity to ensure that people do get their workers' entitlements paid.

I will speak firstly about the example that was brought to my attention by the member for Eden-Monaro. He contacted me in relation to a car dealership in Cooma. It was deregistered at the end of 2008 without being put into liquidation. Workers were owed, in some cases, more than 10 years long service leave, redundancy payments and holiday pay. They could not access these payments through the government's GEER Scheme because the company has to be put into liquidation in order to trigger availability of funds in the GEER Scheme. That is precisely the difficulty that this bill is addressed at tackling. Many members who have contributed have made the point that one of the principal characteristics of phoenix activity is that directors abandon the company—they walk away and they leave the company without the assets necessary to fund the payment of workers' entitlements. In that situation, there are very few options are available to an employee, and that is the problem that this bill seeks to address. Employees in this car dealership in Cooma have been left without any capacity to get their entitlements. We want to ensure, by giving ASIC the power to administratively wind up the company, that those workers will have access to their entitlements through the GEER Scheme. It does not seem like a particularly controversial thing to be bringing forward, but, for whatever reason, those on the other side, in their relentless negativity, have come into this place and once again have said no—no to the protection of workers' entitlements and no to giving ASIC the power it needs to ensure that those workers' entitlements are facilitated.

I will mention another example. This one was brought to my attention by the member for New England. This was an exhaust and tyre company in the seat of New England. The owners of the company had closed the business without paying their workers their entitlements. Employees could not access their entitlements under the GEER Scheme because the company, once again, had not been put into liquidation. This is typical of those engaging in phoenix activity.

Mr Hockey: Why don't you change the GEER Scheme?

Mr BRADBURY: The member opposite says, 'Why don't you change the GEER Scheme?' Well, he had 11½ years to try and do that, but there is a very good reason—

Mr Hockey interjecting

Mrs Bronwyn Bishop interjecting

The DEPUTY SPEAKER ( Mr S Georganas ): Order! I ask the honourable members to direct their remarks through the chair.

Mr BRADBURY: And to the member for North Sydney, who rightly claims that the Howard government introduced the GEER Scheme, which on the face of it is a very good scheme: we will make improvements to that scheme. But a major deficiency of that scheme, which remained uncorrected for the entire time they were in office, is this particular situation where the company lies dormant and abandoned.

The constant allegation made by those opposite is that this is going to strangle business with regulation and red tape. This will only impact on dodgy directors—

Mr Hockey interjecting

Mr BRADBURY: those directors who have abandoned the company. If the member for North Sydney would like to introduce any example of a company that he believes to be an above-board, well-functioning and reasonable operation where the directors have abandoned that company, then I am happy to entertain that example. This is specifically directed to those instances where a company is not complying with its obligations under the Corporations Act. In addition to that, there are tests such as the public interest and, indeed, whether or not in ASIC's view the company is carrying on a business. These are specific instances.

For those opposite to come into this place and say that they are prepared to be complicit in the activities of these shonky directors by denying these workers access to the GEER Scheme is a slap in the face to working Australians, and it is in particular a slap in the face to those working Australians who have been left stranded by the shonky activities of directors who have chosen to walk away from their obligations, to walk away from their company and to leave those workers, through no fault of their own, without wages that have been earned and entitlements that have been accrued. It is a disgrace, and we intend to prosecute the case, whether it be in this place or in the Senate or in the community more generally, because it is unconscionable for those opposite to object to these particular proposals.

I will address some of the other criticisms that have been brought forward by those opposite. One of the principal arguments seems to be that this legislation does not address all aspects of phoenix activity. That is true, because phoenix activity is very complex, and legislative responses designed to attack phoenix activity need to be appropriately calibrated. Indeed, that is why we need to do that: to ensure that all of those good directors doing the right thing are not caught up by this activity. We will ensure that any future efforts to add to this measure to tackle phoenix activity will be approached in that considered way. But we will not accept the criticism that, because this bill only addresses one element of phoenix activity, that is a reason to oppose it.

It is not a reason to oppose it, because to oppose this bill, to say no—as the Leader of the Opposition says every day he comes into this place—is to say no to hardworking Australians who have been robbed of their entitlements by shonky directors who have chosen to abandon their company, leave it high and dry and leave those workers high and dry. This government will not do it. If the opposition want to come into this place and vote to say no to those people, we will shame them in full public view, because it is just not acceptable.

In relation to one of the other arguments that are made—that is, those opposite say that this involves no definition of 'phoenixing'—once again, phoenix activity is not something that has just occurred in our time in government; it has been occurring for a considerable period. If defining phoenix activity were so easy, I suggest that someone would have already done it. I suggest that it would have already been done. Just because something is difficult to define, some might even suggest incapable of definition—I am not so sure I would agree with that—does not mean that, where that conduct is robbing people of their entitlements, we as legislators should not intervene and act to ensure that those people get what they have worked for. These are entitlements and wages that they have earned. We want to make sure that they have access to them.

The other reason it is important that we give ASIC these powers—just to provide some further explanation—is that, at the moment, where these companies are left dormant because directors have abandoned the company, as I indicated earlier, the GEER Scheme only becomes available when the company goes into liquidation. At the moment, under the existing law, an employee could seek to go to court to wind up a company. But I would like to ask those members opposite—such as the member for North Sydney, who has been quite vocal on this issue—a question. If workers have turned up to work one day and found that the directors of their company have abandoned the company, they have not been paid their wages, they have not received their entitlements and there is not even any suggestion necessarily that there are any assets left in the company, do those opposite seriously suggest that a worker in that situation is going to go down and see a lawyer and engage a lawyer to commence proceedings, to go to court and wind up the company? Of course not. And that is precisely the difficulty that we currently have.

There are many people who have written to me—many members of this place have written to me—raising representations about situations in their electorates. We will not stand idly by; we will do something. Those who come in here and say no should be shamed for doing so.

The other argument that has been brought forward—

Mr Hockey interjecting

Mr BRADBURY: The member for North Sydney waxed lyrical, with lots of rhetoric but no substance—it is just so typical: lots of rhetoric; no substance—when it came to the principal charge of imposing this additional regulatory burden. I would like to quote from those at Minter Ellison, lawyers engaged in this type of legal work, who might actually know a bit about this. In a briefing on this bill issued on 23 January 2012, they said it ‘contains some reasonable measures for facilitating the protection of workers’ entitlements, and these measures are unlikely to affect the position of the majority of directors’. Indeed, on the question of regulatory burden, aside from the obligation that relates to FaHCSIA and the paid parental leave provisions—that is not what the criticism is being levelled at—when it comes to the winding-up provisions, the bill does not contain any additional regulatory compliance requirements. In fact, the only time we will see these provisions come into effect is when directors and companies are not in compliance with existing regulation, appropriate regulation, that no-one in this debate is suggesting should be repealed. So it is an absolute furphy.

Those opposite, for whatever reason, want to hide behind this rhetorical notion—the rhetorical flourish of the member for North Sydney—that somehow this is imposing an additional regulatory burden. They are looking for an alibi to try to demonstrate, however feebly, why it is that they will come into this place and argue that workers who have been robbed of their entitlements should be denied access to a scheme. They introduced a scheme—they introduced GEERS. They say it is a good scheme. They say it is there to ensure that those who have been ripped off in their entitlements have access to them. But, rather than give access in this limited set of circumstances where the legislation is currently deficient, they come in here seeking an alibi—the alibi of additional regulatory burden—in order to hop into the corner of the shonky director who was not man enough to stand up and meet the obligations that they had incurred and who not only walked away but left their employees without access to the wages and entitlements they had worked so hard for in order to contribute.

I bring my contribution to a conclusion by addressing one final point, and that goes to the question of consultation on this bill. There have been some fairly outlandish statements made, particularly by the member for North Sydney, about what occurred before the House of Representatives Standing Committee on Economics. I do not pretend to understand exactly what occurred before the economics committee, because I am not a member of that committee, but I do have some grave concerns about his suggestion that somehow this decision was rammed through by the Labor members of that committee. It is not my understanding that that is the practice of that committee. Indeed, when the member for Parramatta—who the member for North Sydney sought to besmirch in this debate—gave a statement to this House indicating that the committee had discharged the bill from any further consideration, I would have thought that that would have been an appropriate occasion for those opposite to respond. The deputy chair of the committee always has the opportunity to be listed on the speakers list to get up in response, but the deputy chair of the committee did not do so. Mr Deputy Speaker, I would suggest to you that, far from this matter being rammed through by members of the committee from this side of the House, this was a case of those members of the committee from the other side of the House not having a problem with the bill—because, unlike the member for North Sydney and others, I suspect they might have even read it. (Time expired)

The SPEAKER: The question before the chair is that this bill be now read a second time.