Thursday, 4 February 2016
Economics References Committee; Report
I rise to speak briefly to committee report No. 4 from the Economics References Committee entitled I just want to be paid. Insolvency in the Australian construction industry. Unfortunately I was not on that inquiry—I would have loved to have been on it—but I am told that the chairmanship from Senators Dastyari and Ketter kept it rolling along. It was a very good report that came out. There are a couple of things I want to touch on. It is important that the Senate should note that there is nearly $3 billion each year in unpaid debts in the construction industry including subcontractor payments, employee entitlements and tax debt averaging around $630 million a year for the past three years. So there is no secret in what a shocking industry it is for not paying its people.
As I travel the country, most of my inquiries and most of my conversations lead around to similar issues of small businesses not being paid. Whether we are talking about construction, which is the worst by the sounds of it, or about transport or about supermarkets or funeral directors or whatever those small businesses may be, there is a fundamental flaw in this nation. I am not pointing the finger at any government; I am pointing the finger at us as a nation that we allow this to happen.
In my experience as a small businessman in the transport industry, I was fortunate enough to work for a major and I got my pay. Every 14 days, my money was there—although sometimes we had to walk out the gate and make sure we reminded them the 14 days was up. But how the heck can we as a nation allow this to happen? How can we, whether it be the conservative side or the Labor side let us, one of the leading nations in the OECD, think that it is all right for businesses to not get paid? I have also thought to myself: it is bad enough when a business goes broke through no fault of its own but when a business goes broke because some mongrel has not paid it, how do we sleep at night? I am not running a union-versus-the-boss argument; I am running a decency argument.
I know, Mr President, when you were involved in your small family business—which was probably a lot larger than my family business and you probably did not have to worry about damages as I did as a furniture removalist—you put everything on the line. It is a big commitment to go out and say, 'I am going to start my own business.' Most of us have not been trained in how to run a business although we do know our trades very well. It goes no different, Senator Macdonald, for lawyers; what is the difference? I do not think anyone in this Senate or in the other place over there—who I think sometimes are on another planet—could say this is the right thing to do.
How has this continued to happen? Not only has it continued to happen but we have another absolute pox in our nation with phoenixing. I know the committee addressed phoenixing with some very interesting words. We all know what phoenixing is. There is nothing worse, when a company goes broke today owing whatever money to its suppliers, to its employees—God help them to their shareholders—or whoever it may be and then start up the next day with a different name and with the same low-lifes running it. I am tempering my language here—I could tell you what I really want to call them.
It is prevalent in my former industry as well. There is no greater example than one that came to my attention last year: there is a company that came out of the bottom of some pond down near Busselton and that went broke overnight, owing $9 million. They are a family business, and they are actually carting for one of the major retail chains in Australia, and I am not going to mention Woolworths—oops! They are still carting for Woolworths. These people shut their doors—this gets even better, and there is an investigation going on. They shut their doors. Then, the next day, the daughter of the owner bought the company. On the $9 million debts and the employees, tough. The employees were too scared to say anything. They have this stupid belief that they are going to be looked after by the employer again, and they are still carting for the same clients. In fact, one of the dopey truck drivers that works for this company, who is probably related to the owner, could not wait to put on Twitter a week later—or a month later or whatever it may be—a photo of himself, in his finest shorts and thongs, at some roadhouse on the Nullarbor, driving the brand-new $380,000 Kenworth across the Nullarbor to continue working.
There is no government response at this stage, but I just plead to anyone with half a heart: it does not matter who you are or what you do; if you have gone out there in good faith and you have contracted—whether it be in writing or verbally—to perform services for an employer or whatever, nothing will defend subcontractors or employees not being paid. I am looking forward to the government response. The reason why I am so passionate about our Road Safety Remuneration Tribunal is that we actually have the legal ability to recuperate money. Jeez, there has been some conversation in this joint, inside and out, and I will continue espousing it, because it is the right thing to do—people deserve to be paid. An order was issued last year that our truck drivers, our owner-drivers, actually have to be paid a safe and sustainable rate and that they have to be paid within 30 days. But by the same token we have massive companies out there, multinationals in this nation, who are now trying to get our truck drivers to accept 90- and 120-day payments—not only our owner-drivers but our reputable transport companies too. If you put yourself in the shoes of a transport owner, whether it be the biggest or whether it be mid-tier, they have to make some very harsh decisions, particular if they are employing a heck of a lot of people who are relying on them for work: do they stretch out these payments to 90 or 100 days?
I know I have digressed from phoenixing, but let me tell you, Mr President: as long as I am in this building—it comes as no surprise—I will always defend anyone being paid; they must be paid. So I certainly hope that the government will address this. I certainly hope that if they are addressed then we will work with them as closely as we can. But I will just put it on notice now that I am not stopping on this. I believe that, whether you are a winemaker or whatever, you should be paid within 30 days. I am going to move a private member's bill, and watch the rats all start flowing when I do that. We will see who the good ones are who are going to support me. Whatever industry you are in, you should be paid within 30 days. We do not have the ability as small businesses—although I am not one now, just to qualify that—to go to our suppliers and say, 'Can you extend me out 50, 60, 90 or 100 days.' Sometimes they will, but all we do is the knock-on effect, the position we put every other supplier in.
On that, I think my feelings have been made very clear. When I put my private member's bill out for truck drivers to be legally paid in 30 days, I look forward to support from all in this chamber. But if anybody wants to come to me and say, 'Sterley, why should it just be truck drivers; why don't we keep going?' then come and talk to me.
I congratulate Senator Sterle on that presentation and for his thoughts. I have to say I think he is 100 per cent correct. My only concern is that I hope the committee's report has some reasonable resolutions in it that can be adopted. I just shrug my shoulders and say, 'What can you do?' I do not think that government regulation can make people pay their bills. If people do not have the money to pay their bills then I do not know what you can do about it, and that is the problem. In business, as Senator Sterle would know, it is, 'Let the buyer beware.' I remember in my own profession, when I left it 25 years ago, we used to send everyone bills, but I understand modern lawyers all get the money up front. Most businesses do these days, particularly with the advent of credit cards. Businesses, quite rightly, say now, 'Look, we're not a bank; we're here to retail a product or a service, so take your credit card and sort out with the bank whether you can pay it or not.'
Notwithstanding that, Senator Sterle is right and the committee report is correct in a number of instances where people are not paid for all the wrong reasons. Again, I relate a personal experience where it actually got me and where the phoenixing that Senator Sterle talked about, I think, has happened. There was a group of Sydney 'entrepreneurs' who came to Townsville to build a high-rise right opposite my office. I thought, 'That looks good, and in 20 years or so when I retire from the Senate I would not mind living there,' so I bought off the plan. Halfway through they changed the design of my unit, whereupon I took them to court. I am confident that I would have won, because it was a blatant breach of the contractual arrangement, but I spent about $20,000 to $30,000 on lawyers and barristers and reports, and before I could get them to court the company went broke; the Sydney company that was building this high-rise went into liquidation. The building had almost been completed. But I was denied having my day in court and I was denied recovering the tens of thousands of dollars I had paid in legal fees, which I could have recovered had we gone to court. Yet I am very confident that the people involved in that group are back in business in Sydney under an assumed name. It was okay for me. I cannot afford it, but it impacted far less on me than I know it impacted upon a lot of other people who are dealing with the same company.
But how you deal with that I do not know. I do think that we need a complete revision of the insolvency laws in Australia. Perhaps this report of the committee may be a step going forward—a starting step in the need to consider seriously the reform of insolvency in this country.