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Parliament House, Canberra: transcript of press conference: employee entitlements, BAS reform, currency swaps, Governor-General, Dr Wooldridge and media ownership.

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Subjects: Employee Entitlements, BAS reform, Currency swaps, Governor- General, Dr Wooldridge and media ownership.

CREAN: Today Labor will be introducing a package of measures designed to protect employee entitlements but also to cut the red-tape burden on small businesses. There are four Bills that will be introduced today, one goes to the protection of workers entitlements to ensure that people whose companies go under as a result of insolvencies have those entitlements protected. Even George Bush is talking of the need to address this issue. Labor has had a proposal in the past, we will be reintroducing it today and testing the Government’s commitment. The only company that has gone under that has seen 100 per cent of worker entitlements paid out was the company chaired by the Prime Minister’s brother. What we want is a scheme that covers the whole of the workforce and this Bill today will do it. Interestingly it extends the protection, not just to employees but to the wages of sub-contractors.

The second Bill that we are introducing will change the Corporations Law to prevent the circumstances that we saw in the Patricks dispute whereby a sham restructuring could deprive the employees of their entitlements. Also changes to ensure that the Ansett type situation with Air New Zealand is not able to happen again. These are important initiatives and the response of two recent examples of our corporate history whereby workers entitlements have been denied.

The other initiative today, the third Bill that we will be introducing will see the requirement for businesses to pay quarterly the superannuation contributions, this is the workers money if you like but the contributions being paid into the funds at the moment, there is a requirement only that they be paid in annually. There have been circumstances in which business going under have seen these benefits not available.


The fourth piece of legislation that we are introducing is the BAS simplification. The means by which we simplify the BAS collection to give small businesses the option of the ratio method. The ratio based on the history of their GST receipts of the individual business. A calculation that is so simple that it will lift the burden from small business. Two boxes only, the ratio is in the first box, the turnover for the quarter in the second box, the calculation determines the remittance that needs to go to the Tax Office with no need for any reconciliation. This will significantly lift the paperwork on small businesses. It’s an option for them, not a requirement to them. If they are happy with the current arrangements, they can choose to continue with those, but for those thousands of small businesses who are drowning under the paperwork and the red-tape associated with the BAS this will be an important issue. The Howard Government promised to cut the red-tape for business by 50 per cent when it came in, it is no longer a core promise, it in fact increased the burden of paperwork.

Now this is a comprehensive set of initiatives designed to protect employees, to protect sub-contractors, to lift the paperwork burden on small businesses, it will be very interesting to see how the Government responds to these initiatives.

JOURNALIST: What does this package mean for Labor’s position on exemption of small businesses from unfair dismissal?

CREAN: We are considering the Government’s package of measures in the Shadow Cabinet today, where we see the opportunity for constructive amendments, we will put them forward. We are prepared to talk with the Government so far, despite the offer of being prepared to talk with them about these initiatives they haven’t chosen to take that up. But what we are putting forward today is positive constructive initiatives to lift the paperwork burden on small business.

JOURNALIST: These become the bargaining chips in effect on the other issue?

CREAN: No I don’t see them as bargaining chips, I see these as constructive alternatives, I see these as real proposals. We know that the ratio method is what small business wants. In the last election we put it forward, it was endorsed by COSBOA, it was endorsed by the National Farmers’ Federation, by the pharmacists, the meat processors, this has got overwhelming support from the small business community. The only people blind to the need to do it is the Government.

JOURNALIST: With regards to the first Bill that you talked about, how specifically does that protect workers entitlements, beyond what the Government has already put in place?


CREAN: What the Government has put in place is ad-hocery, there is no scheme in place that guarantees fully the entitlements of employees in the event of insolvency. What this proposal does is to say that there should be a 0.1 per cent levy on payroll, a very small amount which would be administered through the superannuation funds, with the superannuation funds then offering the insurance product. It is an insurance scheme in the same way as the super funds now have to offer product for death and disability, this will be a product that they would offer for the protection of workers entitlements, full protection of workers entitlements in the event of insolvency. Now one of the schemes that we have seen, the current Ansett scheme, goes to show how ad-hoc it is. It doesn’t cover the full entitlements, it has to be collected by a tax on all those who travel, the Australian public. We believe better to spread the burden across the workforce and importantly under our scheme small businesses, businesses that employ less than 20 people would be exempt from the levy.

JOURNALIST: So does it differ at all from the proposal that Labor had in place before the election?

CREAN: It is essentially the same except we have extended it as I have said before, to pick up the circumstances of sub-contractors whose wages are in jeopardy as a result of the sub-contracting arrangements.

JOURNALIST: Mr Crean who would be responsible for paying the levy for sub-contractors?

CREAN: Levy for the sub-contractors?


CREAN: Well we would see it as part of the insurance scheme, the business that was doing the sub-contracting would be required, subject to the employment threshold would be required to contribute.

JOURNALIST: Except if it was less than 20 employees in which case the Government would pick it up.

CREAN: Yes, the 20 exemption obviously the Government would need to pick that up.

JOURNALIST: Do you think that it is the responsibility of sub-contracting companies to look after the welfare of what are in effect independent contractors?

CREAN: I think we have got to understand the changed nature of the workplace. I mean we have tended to look at people in terms of the direct employer-employee relationship in the past. It’s all changed. I mean you say to me that we have got to modernise in terms of our relationship with


trade union movement, this is about modernising and recognising where the changes in the workplace have gone. That’s the important extension so far as this provision is concerned.

JOURNALIST: What work has Labor done on estimating the value of these contributions across the economy?

CREAN: We did work before the last election, and I think Departmental advice. I think Robert may be in a better position to comment on this, but I think advice was that we got is that it could well come in under the cost associated with the 0.1 percent of payroll.

McCLELLAND: Very importantly the trouble with the Government’s scheme is that they don’t have a means of topping it up by recovering the funds paid out through related bodies-corporate. Their only means of topping it up is through taxpayers, we have got a two pronged approach, one is the funding of it by the 0.1 per cent levy and then for the scheme itself, to stand in the shoes of the workers to actually go and recover from the related bodies-corporate. So Ansett of course, they would be going to Air New Zealand.

JOURNALIST: The value, broadly speaking in dollars, what would that be?

McCLELLAND: If you work out at 0.1 per cent on the average weekly earning, which is about $44,000 a year, its about $44 a year, so it is a pretty negligible contribution to have a fund established.

JOURNALIST: Have you done any economic modelling on what the impact could be on employment? Could this levy cost jobs?

McCLELLAND: For $44, $44 a year, per worker for businesses above 20 employees is a very small impost indeed, and the theory is that insecurity, that is the fear of losing your job, fear of being left without any entitlement is actually an impediment to spending, so we believe that it will have as many positive economic consequences as well as a minimal cost to business.

CREAN: I just make the point that if you think that is going to have the impact on jobs which is the line that the Government will trot out, just be aware that the Government is committed from July 1 of this year to a 1 per cent increase in the superannuation contribution as part of the earlier package so if 0.1 per cent is going to have an impact what’s 1 per cent going to have? Perhaps they should answer that question.

JOURNALIST: Those who have studied some of these schemes overseas say the 100 per cent Government subsidised schemes tend to act as no brake then on employers and just sort of remove all responsibilities from employers have you considered that?


CREAN: I think that the vast majority of employers do the right thing. I do and that has been the experience that we have had but it is the unscrupulous one and they have been spectacular and I think in the end you will either take the view of that business collectively needs to contribute or society collectively needs to contribute. At the moment we have got the circumstance in which society through some ad-hocery contributes but it doesn’t address it adequately, there is still the arguments about the entitlements. What you have got is a Government saying it wants to protect the entitlements but it doesn’t have a scheme that does it. So the Government is saying they believe entitlements should be protected but they are not prepared to put in a scheme to do it, we say they should be protected, and we are prepared to put in a scheme that does it.

JOURNALIST: Mr Crean does your adoption of this system mean that the union backed Manusafe proposition is dead in the water?

CREAN: Well this would be a scheme that all funds would take out the product for. I think that we always argued that our scheme, national in its application was a far better approach because it spreads the risk and therefore lowers the cost, I think the great difficultly that came out when Manusafe was talked about and when we saw the case of individual companies and the cost that was associated with them insuring just one off, the cost was horrendous, it was prohibitive, so I think that the national scheme in the sense that it spreads the risk, significantly lowers the cost and will therefore provide a much more attractive product.

JOURNALIST: We are yet to see any legislation, legislative changes proposed by the Government to the Corporations Law to reorder the priorities putting the workers before unsecured creditors in the event of wind-ups but what’s your opinion on that proposition now?

CREAN: Well we’re still waiting for the Government to come forward with that commitment. This is something it promised before the last election and hasn’t delivered on. Like so many things it promised before the last election, says one thing before the election and either does nothing or does the reverse afterwards.

JOURNALIST: So it’s not part of your policy so presumably you don’t support it?

CREAN: No, no, I don’t say that, I mean I think that it is

important to raise the order in terms of the priorities but what we’ve said is that the Government so far has signalled an intention to do it. We’ll wait and see what they’ve got to do on that, we expect that’s the sort of thing that they would come forward with. Let’s have a look at it then.


JOURNALIST: Mr Crean how certain are you that small business wants further changes to the BAS given the GST has been in for now just over eighteen months?

CREAN: Absolutely certain of it Steve. I’m not too sure whether you were here before but in the last election which was only a hundred and twenty days ago, it was, our proposal was endorsed by COSBOA, by the National Farmers’ Federation who had that quaint phrase, this enables us to get back into the paddock. It was endorsed by the Pharmacists Association, the small retailers; it was endorsed by the meat processors. This has wide spread support and in any event it’s an option Steve, this is not mandating it, it’s an option. If people are happy with the current arrangement they can stick with it. But we know that there are many thousands of small businesses who are not happy. They’re spending too much time filling out the paperwork. They want to get on with doing what they’re good at, running their businesses and the BAS forms are preventing them doing it. What we’re proposing is an option by which we make it so simple that it just lifts that whole paperwork burden from them.

JOURNALIST: Mr Crean can I just clarify an answer you gave earlier when you were talking about the small business exemptions in the unfair dismissals. Do I understand that you’re still considering accepting elements of that piece of legislation?

CREAN: We have said that if the Government simply intends progressing with the bill that Tony Abbott put out which he calls fair dismissal that actually enables businesses to dismiss people harshly and unjustly with no recourse we’re not going to have any truck with that. We’ve said to the Government consistently if you want to talk to us about this issue we are prepared to sit down and talk. So far the Government has not taken up that invitation.

JOURNALIST: So are you looking at the Government’s whole package of IR changes or just today in Shadow Cabinet or just the Unfair Dismissal Bill?

CREAN: No we’re looking at the package of changes, which the Government has got listed for legislation today.

JOURNALIST: Can you let us know later in the day the outcome on that?

CREAN: Sure.

JOURNALIST: Mr Crean what is the ALP’s strategy in further investigating the Treasury interest rates swaps?

CREAN: Our strategy is to firstly question the Treasurer about his state of knowledge because he seems to be a bit evasive and secondly to


reconvene the Senate estimates process to call back Treasury officials to get more information from them. We know this is a Government that’s been asleep at the wheel. We’ve now got Peter Costello asleep at the roulette wheel. He’s gambled and he’s lost and if the leaks about the Budget are any indication the people who are going to be made to pay for this are the unemployed, the disadvantaged, the people who can least look after themselves. There’s also an interesting dimension of the extent to which they’ve moved from currency swaps to interest rate swaps. If that’s the case all they’ve done is changed the game. Moved from roulette to craps. But they’re still gambling. Costello’s Casino is costing this nation money and we want to get to the bottom of why the Government if it got advice didn’t follow it. But we also want to expose the hypocrisy of this Government that’s prepared to play loose with public’s money and then make others suffer.

JOURNALIST: What’s the process of reconvening the Estimates committee?

CREAN: The process of reconvening the Senate Estimates committee is through a decision of the Senate, I understand a vote?

CONROY: We’ve got a Notice of Motion we’re lodging today and we’re hopeful that the Democrats will support us. We’ve had indications from Senator Stott Despoja and Senator Murray that they’re willing to support our position, which would mean hopefully some time on Wednesday we’ll be reconvening those estimates.

JOURNALIST: If the game has changed from currency swaps to interest rates swaps, currency swaps were bought in by Labor, were interest rates swaps a measure you used?

CREAN: Look we did introduce these measures and always knew there were risks associated with them but demonstrated that we could manage it. We demonstrated that under us we made money out of it. Something like two billion dollars. Under them it’s the huge losses that have been incurred. No one’s trying to pretend there aren’t risks with this strategy, the argument is you can manage them or you take advice to get out of them and what appears to be the case is this Government was advised to get out of them and ignored that advice. That’s the issue.

JOURNALIST: And did you use interest rates swaps too?

CONROY: I think they introduced them, there might have been some pre 96’ but they were largely taken up after 96’ and so the majority of the losses that have incurred after 96’ are on the Treasurer’s head.

JOURNALIST: Do you think it’s now odds on that the Governor-General is going to stay where he is?


CREAN: Well I think that the circumstances surrounding the Governor-General, the new pieces of information that keep coming out just shows that the issue won’t go away. I think time will tell in terms of what happens with the Governor-General. I think it’s terribly important though that out of this issue, whatever happens to the Governor-General and you know my position on what should happen, but whatever happens to the Governor-General I think it’s time that we look at adopting a position I urged him to adopt and that is looking at what can be done in a lasting way to actually address the problems of the victims of child sexual abuse. And that’s something that we will be turning out mind to a making an announcement on over the course of the next week or so.

JOURNALIST: If Hollingworth’s still there at the next election would you sack him if you won? Given that there may be a double dissolution that might be earlier than 2005?

CREAN: This is very long term planning. I’m actually looking at a shorter-term solution so let’s wait and see what happens in that regard.

JOURNALIST: You couldn’t possible (inaudible) you know, you’ve already made your statement clear haven’t you, your position….

CREAN: I’ve made my position clear as to what I think the appropriate course of action is. I think that time will tell as to whether or not that’s pursued either by him or by the Prime Minister. I think that what we’ve been able to demonstrate with the Prime Minister his deceit in terms of going to the last election. What the Governor-General exercise is demonstrating is his lack of judgment, his lack of judgment in the first instance in failing to check the background of his appointment and now his lack of judgment in failing to act. Now I think both those elements will weigh to the disadvantage of the Prime Minister over time.

JOURNALIST: So do you think you can speculate? Do you think…

CREAN: No I’m not going to speculate. I’ve indicated what I think should happen. I’m happy to leave that position because my position hasn’t changed. I’m happy to leave it there and I think that the events over the weekend just demonstrate that the issue will not go away for the Governor-General. The disendorsements have been there that shows the Office is being impacted upon which is what I said was likely to happen. But importantly whatever happens to him I think we’ve got to move on in terms of the issue and that’s what I’m turning my mind to at the moment.

JOURNALIST: What about Dr Wooldridge and are you satisfied at all with his explanation and the Health Minister’s explanation about an


underspend in the health budget? Using money that was going to otherwise disappear?

CREAN: No I’m not satisfied about that because there are circumstances in which there have been underspends in other programs in that portfolio which have been carried over. Why didn’t this apply to the Asthma Foundation? What we’ve got here is a Minister, a former Minister who’s prepared to look after himself but not the people in the community who need the attention and what this exercise demonstrates yet again is why the cooling off period is needed. The cooling off period for twelve months before Ministers can take up an appointment in fields that they were associated with when they were Ministers. This is a type of pattern bargaining we want to end. This is enterprise bargaining by Reith, which has an amazing pattern about it, feathering their nests through their contacts and doing it at the eleventh hour before they finish up as Ministers. That’s got to end and the proposal that I’ve put forward will see it end and I would urge the Prime Minister to think seriously about the proposal I’ve put forward to amend the code of conduct and to adopt it. I think it’s in all of our interest that we do that.

JOURNALIST: Should they refund the asthma money?

CREAN: The asthma money should go to, the money that was taken should go back to the appropriate cause.

JOURNALIST: Mr Crean you had plenty of time when you were last in Government to introduce cooling off periods. What’s changed in the last six years?

CREAN: Well it’s true I’m not trying to pretend that these circumstances only apply to their Ministers. They did apply under us and I’ve made that point before. But the point is I think we’ve got to change now. I think the relationship between Government and the private sector has become greatly more enmeshed over recent years and I think it’s time to modernise the code of conduct to reflect that. Just as I’ve put forward proposals to modernise the way in which we conduct ourselves in parliament. I think we’ve got to modernise the codes of conduct and the issues of conflict of interest that are associated there with and that’s why I believe that we need to do it now.

JOURNALIST: Mr Crean speaking of upcoming legislation are you favourably disposed to relaxing foreign ownership of Australian media?

CREAN: Well we still wait to see what the Government proposes by way of amendments with cross media and foreign ownership. Let me just say this that the test that we will apply is what ensures greater diversity in media ownership. That’s the test against which we will judge all proposals. ENDS.