Hike in payouts puts focus on scheme
The federal opposition has again declined to detail its workplace relations policies, as new figures show the cost of taxpayer payments to employees whose companies have gone bust will reach $651 million over three years.
The Department of Education, Employment and Workplace Relations has confirmed that payments under the Fair Entitlements Guarantee, formerly the General Employee Entitlements and Redundancy Scheme, reached $205 million in the nine months to March, taking the expected cost of the scheme to $651 million over the three years to June 30, 2013.
Higher-than-expected payouts in the second half of 2012 prompted the department to increase the GEERS budget by about 50 per cent to $304 million for the 2013 financial year. In the September quarter alone, $94 million in GEERS payments were made which declined to $75 million in the December quarter, and $36 million in the March quarter.
The scheme pays the wages, annual leave and redundancy entitlements of workers who lose their jobs when a business is liquidated or goes bankrupt. It is a bipartisan scheme introduced in the wake of the Ansett collapse.
But Eric Abetz, the shadow employment and workplace relations minister, last year criticised Labor's decision to uncap payments - previously set at 16 weeks of redundancy entitlements - and the Coalition voted against the bill. "It sets a standard way beyond most enterprise agreements," he said in November. "It's a good scheme but making it open-ended [is not good]. This is just going over the top."
Questioned whether the Coalition had any plans to change the Fair Entitlements Guarantee, a spokesman for Senator Abetz said: "We have said in the past that the Coalition is proud of introducing the GEERS program when last in government to protect workers' entitlements. We will have a workplace relations policy in good time before the next election."
The spokesman declined to answer when asked whether the Coalition would look to reintroduce caps on payments if it wins office.
Opposition Leader Tony Abbott said last week there would be "careful, cautious, responsible change" in industrial relations under a Coalition government.
Mr Abbott said while it was in "the marrow of our bones" to understand that employers had to make a profit to employ, "on the other hand, we also know that the worker's got to get a fair go, the worker deserves justice, just as the manager and the owner deserve justice, and it is a question of getting the balance right".
Stephen Smith, national industrial relations director at industry body Ai Group, said it was "concerning that the cost of the scheme does seem to have increased significantly since the provisions were amended to implement far more generous redundancy entitlements".
"It's a very important scheme and it's important the scheme remains a viable one," he said.
Just 9.3 per cent of the $195.5 million given under GEERS in the 2012 financial year was recovered. For the 2011 financial year, $16.3 million or 10.7 per cent was recovered of $151.5 million.
The department said recovery rates for the 2013 financial year would be included in its annual report in October. "It's also important to note that recoveries in one financial year don't necessarily relate solely to advances paid under GEERS that year - there's usually a time lag between payment of an advance and the eventual payment of dividends when an entity is wound up," a spokesman said.
Fairfax Media reported last year that the federal government had received just $200 million from liquidations after paying more than $1 billion in GEERS. But a source with knowledge of the scheme said the retrieval rate was not the point, as the scheme operates as a last resort, "The more important issue to us is the overall blowout in what is being paid out."