The employment department is refusing to reveal the identities of the directors who contributed to a total unpaid wage bill of $1.6bn over 10 years, which was left to taxpayers to pick up.

New figures, produced under freedom of information laws, show that 1,322 people, who were each directors of two or more companies that failed, were responsible for a quarter of the unpaid wage bill, or $400m.

The employment department told Guardian Australia the heavily redacted document was “compiled for the purpose of investigating potential breaches of law” and could tip them off that they were subjects of current or pending investigations.

But in its decision, the department concedes that the document lists directors “without indicating whether or not any given director has been, is being or will be investigated, nor whether the department has yet established any wrongdoing on the part of any given director”.

The opposition employment spokesman, Brendan O’Connor, said the Turnbull government had shown “the absolute height of hypocrisy” by “incessantly harping on about accountability and transparency for registered organisations, but not applying those principles to company directors who get away with not paying worker entitlements, leaving the bill to the taxpayer”.

The un-redacted parts of the document produced show that from July 2007 to March 2017 the Fair Entitlements Guarantee (FEG) and its predecessor paid out a gross total of $1.8bn, less $197m recovered through liquidation of the companies.

During that period, there were 22,574 directors of the 14,903 companies that accessed the scheme and underwent liquidation.

Of these, 1,322 – or less than 6% – were directors of two or more failed companies that accessed the scheme, responsible for 2,419 liquidations, or 16% of the total.

And these directors were responsible for a quarter of the unpaid wage bill: a gross total of $461m, less $57m recovered through liquidations. Just 12.5 cents in the dollar was recovered from these companies.

In its decision, the employment department concluded it would “unreasonably affect the business or professional affairs” to reveal the names of the 1,322 directors.

“This information is not publicly available, and its release would likely cause unfair public scrutiny of those directors, or negative inferences in respect of their behaviour, in circumstances where this would be unreasonable,” it said.

The decision cited directors of multiple companies within a collapsed corporate group as an example of those whom the list might “unfairly imply [engaged in] professional misconduct if made public”.

A consultation paper released in May says one in seven of the 650 companies that accessed the scheme between 2013 and 2015 had engaged in “sharp practices” such as contrived company group structures and illegal phoenix activity to avoid liability.

Draft speaking points for the employment minister produced under FOI laws state that “in several recent cases such practices have been openly employed to shift the cost of unpaid employee entitlements to the FEG scheme”.

The average annual costs of the FEG scheme have tripled from $70.7m in the four years to June 2009 to $243.6m in the four years to June 2017.

In October, the Turnbull government announced it would crack down on misuse of the taxpayer funded safety net, including creating a new civil penalty for directors or managers who make a transaction that a reasonable person would have known would evade employee entitlements.

The standard for criminal offences will be lowered so that company officials who recklessly make a transaction that has the effect of avoiding employee entitlements are punished.

O’Connor labelled the Coalition’s changes “a pale imitation of Labor’s phoenixing package, which would crack down on dodgy company directors”.

Labor’s proposed changes would require company directors to register for an identification number, increase maximum penalties for phoenix activity such as breach of directors’ duties, and introduce an objective test for the company law that prohibits transactions that deprive employees of their entitlements.

The Australian Council of Trade Unions president, Ged Kearney, said the documents demonstrated that when companies did not pay their workers “taxpayers are being forced to cough up”.

“Given the report shows many directors are repeat offenders, the rules are clearly broken and inadequate,” she said.



“We need stronger laws that mean employers are caught, held to account and working people get the money they are owed quickly and easily.”