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Monday, 22 October 2018
Page: 10612


Mr VAN MANEN (FordeGovernment Whip) (17:40): There's much in the member for Gorton's contribution on the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018 that I can agree with, but there's also some that I can't. I'm sure that was his reverse position on the bill as well. It is always important to recognise that, as we are seeking to pass legislation such as this to protect employees' entitlements, we also reflect on the number of other things that we are doing as a government to ensure that people have the opportunity to work, are paying lower taxes and are better able to meet their day-to-day cost-of-living needs. In that regard, I think this is a very important piece of legislation as it seeks to further protect employee entitlements by strengthening enforcement and recovery options to deter corporate misuse of the Fair Entitlements Guarantee.

The FEG, as the member for Gorton has outlined, commenced in December 2012, replacing the previous schemes that applied from January 2000; namely the General Employee Entitlements and Redundancy Scheme. The FEG is designed to provide financial assistance to employees left with unpaid employee entitlements due to liquidation or bankruptcy of their employer. The FEG scheme remains an important safety net for workers and ensures the Australian people are not left out-of-pocket if their employer becomes insolvent. The government implemented the FEG Recovery Program from 1 July 2015 to more proactively pursue recovery of FEG payments, and the recovery of these payments has doubled since the recovery program commenced.

The objective of this bill is to better provide and protect entitlements to employees that are payable on the termination of these employees through the FEG scheme, including unpaid wages, annual leave, long service leave, payment in lieu of notice and redundancy pay. Over time, there have been repeated instances, sadly—and the member for Gorton mentioned a couple, but I'm sure there are many others—where employers have avoided their employee entitlement obligations and exploited the FEG scheme. The consequence of that is that it leaves a burden—an unfair burden at that—on the Australian taxpayers who do the right thing; not just individual Australian taxpayers but also corporate Australian taxpayers and small to medium business who do the right thing by ensuring that their employees are paid the entitlements they're due. It's disappointing that we as legislators in this House have to be in the position where we have to pass laws such as this because a small number of our business community don't take the responsibility of ensuring that they pay their employee entitlements as and when they are due and they leave that burden unfairly on the taxpayer. It is important that we ensure that these entitlements are paid.

The scheme originally, when it was set up, was to be used only as a last resort. In some cases, it's fair to observe, it could create an unfair commercial advantage between those who are seeking to do the right thing and those who aren't. That is why the government is the committed to implementing these legislative reforms, to stop the corporate misuse of the taxpayer funded FEG scheme.

Raising the professional responsibility of employers will not only play a significant role in saving the taxpayers' dollars but also provide the Australian people with greater income security and confidence. We need to remember that many of these entitlements, particularly superannuation, are forgone wages. If it wasn't being withheld to go into superannuation, the companies would actually have to pay that in wages. So I don't see—and the government doesn't see—that it's fair to allow the actions of a few to result in the improper shifting of costs onto the Australian taxpayer.

We strongly believe that the responsibility of all employees is to pay their workers' entitlements as and when they are due. As of 30 June 2018 a total of $2.8 billion has been paid to over 203,000 workers under the FEG and predecessor schemes since they were introduced in 2001. This excludes another $383 million paid to 13,000 former employees of the Ansett Group under a special scheme. As you can see from those figures, it's crucial to address the impost on taxpayers of the scheme's annual bill, which has more than tripled over the past nine years from $70 million in the four-year period between July 2005 and June 2009 to $235 million in the four-year period between July 2014 and June 2018. Sadly, what this reflects is a poor outcome for the employees in Australia who are missing out on their entitlements and, importantly too, a poor outcome for the taxpayer.

I think it is good to see that, as part of this bill, we are seeking to minimise the cost to the taxpayer whilst ensuring that Australian employees get their entitlements. This bill will deter and penalise company directors and other persons who engage in or facilitate transactions that aim to prevent, avoid or reduce employer liability and employee entitlements in insolvency. The framework introducing the bill enables a swift recovery of employees' entitlements from other entities in the corporate group, or closely connected economic relationships, where it will be just and equitable and where these other entities have unfairly benefited from the work done by hardworking employees. The bill also strengthens sanctions for directors and company officers with a track record of corporate contraventions and insolvencies where the FEG is repeatedly and inappropriately relied upon.

The reforms build on other actions the government has taken to protect employee entitlements, including introducing legislation to tackle non-payment of the superannuation guarantee by targeting employees who fail to meet their superannuation obligations and releasing draft legislation to combat illegal phoenix activities involving the deliberate avoidance of company debts, including employee entitlements, by company operators and pre-insolvency advisers who facilitate this activity. We've also released draft legislation that contains discussion around director identification numbers.

This bill will mean that Australian taxpayers don't bear the cost of business doing the wrong thing. It will mean employees don't miss out on their entitlements and it will mean hardworking Australians can continue to provide for their loved ones. These new laws mean we will have stronger levers to ensure employers are held accountable for their obligations. The new criminal offence and civil penalty provisions will strengthen the ability of ASIC to take enforcement action against directors and facilitators who do the wrong thing. The criminal offences will carry the highest penalties available under the law to act as a strong deterrent to these egregious behaviours that hurt all hardworking Australians. This sends the strongest possible message to employers, large and small, and reminds negligent businesses that, when it comes to paying your bills, this government believes your workers come first.

By expanding the parties who can commence compensation proceedings to include the ATO, the Fair Work Ombudsman and the Department of Jobs and Small Business, we're enhancing prospects for the recovery of unpaid employee entitlements, for the benefit of all Australian workers. The new disqualification powers will enable ASIC to strike off those company directors and officers whose behaviour has inappropriately impacted the FEG scheme, acting as a deterrent to those who make a habit of liquidating their businesses and leaving their employees behind. The changes are tightly targeted to deter and punish only those who seek to avoid their employee entitlement obligations and exploit the FEG. They will not affect the overwhelming majority of companies who are doing the right thing.

The unfortunate reality is that businesses can become insolvent, but that does not absolve them of their obligation to pay their employees. The FEG related law reforms contained in the bill aim to put a stop to this behaviour and prevent wrongdoing, with new measures holding businesses accountable for ensuring employees are paid all their entitlements for as long as they are operating. These reforms send a strong message to those who are seeking to exploit the FEG scheme: don't rely on the FEG to do this for you when you can do it, and should be doing it, for yourself and your employees today.

This bill upholds the government's commitment to protecting the entitlements of those in our community who go out every single day to work to build wealth not only for this country but also for their families, allowing them to put a roof over their heads, put food on the table, educate their children and contribute to our community, as so many of them do.

I commend this bill to the House in its original form—despite the pious amendment from the member for Gorton—because we owe it to those people in our community who work so hard each and every day to protect the entitlements that are due to them.