Senator FORSHAW (9:50 AM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Guaranteeing workers' entitlements in the event of company insolvency is one of the most important reforms yet to be undertaken by an Australian government. Australia has a fine record when it comes to the introduction of social legislation. We were one of the first countries in the world to introduce worker's compensation, and we were the first to grant child endowment payments to mothers and introduce long service leave to workers. And yet, when it comes to guaranteeing workers' entitlements against an employer's insolvency or providing them with the utmost priority against all other creditors, Australia has neither. The rest of the world has passed us by. In this respect, our proud tradition of social reforms stands diminished.

Guaranteeing workers' entitlements is a social reform for our time. The recent tragic stories of the miners at Cobar and at Woodlawn mine near Goulburn and of the meatworkers at Grafton remind us of that. More recently, the events on the waterfront where companies were stripped of their assets and workers sacked in the middle of the night demonstrate that Australians have never before felt less secure in their jobs. As Asia's economic woes begin to have their effect on our shores, business insolvencies are destined to increase dramatically.

This bill is in similar terms to a bill introduced recently into the House of Representatives by my colleague, the Member for Prospect, Mrs Crosio. I congratulate Mrs Crosio on her leadership and initiative in this matter. The bill seeks to reform an aspect of Australian industrial relations that can no longer be set aside. We can no longer enjoy the luxury of sitting in this Senate and expressing our sympathy to workers left without their entitlements and saying: "Oh yes, something needs to be done to stop this happening in the future", and then wait for somebody else to do it. With this bill, I am doing something about it. With this bill I am giving the government and other senators the opportunity to do something about it as well.

As it stands at the moment, at least 3,000 Australian workers are owed roughly $20 million in their legal entitlements due to company insolvency. This is a disgraceful figure, but it should not be a surprising one. It is estimated that 13,000 businesses and companies become insolvent each year in this country, leaving at least 20,000 workers out of a job. Of course not all of these ex-employees are left without their accrued entitlements but a good many are.

In 1993 the Labor government, supported by the Coalition and by both unions and employer groups, relegated the Commissioner of Taxation to the category of "unsecured creditor", thereby improving the position of unpaid employees for priority of payment in the event of an employer's insolvency. This was an important and commendable reform. However, in hindsight, it has not proved as successful as was first hoped. Employees have continued to miss out on their entitlements for the simple reason that, if a bankrupt enterprise no longer has any assets, the workers, whatever their position in an order of priority, do not benefit.

The Employee Protection (Wage Guarantee) Bill 1998 aims to rectify this situation by establishing a scheme to guarantee the payment of wages and other liabilities in the event of insolvency. Under the scheme, no Australian worker need ever again be left without entitlements should his or her employer collapse into insolvency. Unless exempt under the legislation, all employers must take out and maintain a policy of wage protection insurance for their work force with an approved insurer. The Insurance and Superannuation Commissioner will administer the scheme. In the event of an employer's insolvency, workers will be insured for unpaid wages, annual leave or long service leave, liabilities resulting from the termination of employment without notice or with insufficient notice and liabilities for repayment of any amounts paid by the employee to the employer for training in a particular trade or profession. One of the most important aspects of the scheme is that it will include a bad risk cross-subsidisation system to help offset the concerns of employers and the insurance industry.

I am well aware that there will always be some employers who are perceived by the insurance industry as potential bad risks. If this concern were allowed to manifest itself without regulation, some employers would find it very difficult to obtain insurance cover or, if they did obtain it, it would be prohibitively expensive. As a way around this problem, the bbill requires approved insurers participating in the scheme, along with the Insurance and Superannuation Commissioner, to participate in a bad risk cross-subsidisation system.

Under such a program, an insurer would be required to accept an insurance proposal—even from an employer considered a bad risk—at a rate of premium not exceeding a maximum fixed by the commissioner. In order to mitigate the harshness of this from the insurer's point of view, the bad risk cross-subsidisation scheme would allow for the transfer of the burden of bad risks away from the individual insurer to the total body of insurers.

Critics of this bbill have argued that it would place an unfair extra financial burden on all employers to make up for the unscrupulous actions of a few. My response to that is twofold. Firstly, I do not consider the estimated extra 0.1 to 0.3 per cent of an employer's total wages bbill that they would be required to contribute to participate in the scheme to be an unfair burden. It would certainly not be a burden of the stature that has been discussed: impeding a business' growth, the hiring of their staff or indeed hastening their own insolvency. Secondly, all employers are members of a corporate community. As a community they have a number of social responsibilities and one of those is seeing that all of their workers, in return for their labour, receive the entitlements that they are owed. Obviously we have seen that, at the present time, there are occasions when that responsibility is not being met. Employers have to work as one to address this issue, to live up to their responsibilities. Participation in this scheme should be seen in that respect.

However, if the government is uneasy about socialising the burdens of insolvency by passing the responsibility of risk on to all members of the corporate community, it has a number of options open to it. One would be to amend my bbill to require participation in the scheme only by those employers who did not enter formal arrangements to place their employee's entitlements in trust. Another would be to amend this bbill to require lending institutions to pay for maintaining their privileged position at the top of the creditor preference queue. If the government were to underpin my scheme by firstly taking contributions from the banks, payments required from employers would be substantially reduced.

After the Member for Prospect introduced a similar bbill into the House of Representatives in March this year, she received an extremely positive response, including many expressions of support from members, not only from our own side but also from the government's side, as well as from the community at large. Australians, not just those workers who have lost their entitlements but I think the great majority of the people we represent, want to put an end to this sort of unfairness taking place. I think most of us recognise that fact. By supporting this bbill, senators can put this vexing problem behind this country once and for all. As long as this reform remains undone, thousands of ordinary Australian workers and their families will continue to be failed by a system they look to for justice, fairness and equity.

The Prime Minister (Mr Howard) said last month, in relation to legislative reform:

There'll be people running around saying, "Oh, don't do it—it's too hard". I mean, you can't go on forever saying that. We know everything's a bit difficult if it's a big reform, but the Australian people in the long run will respect you and support you if you have a go.

I invite the Prime Minister and the members of his government to heed his advice and act on this matter with the utmost urgency. The Opposition, I know, stands ready to give him that support.

I commend this bill to the Senate.

Debate (on motion by Senator Ian Campbell) adjourned.