Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

Thank you, Mr Deputy Speaker; I will certainly do that. The Corporations Amendment (Phoenixing and Other Measures) Bill 2012 introduces a process for ASIC to wind up abandoned companies without having to go through the courts, so that employees can in turn access the government's General Employee Entitlements and Redundancy Scheme. Presently, ASIC or an employee must apply to the courts in order to have a company wound up. That can be both costly and time consuming.

The bill also introduces a regulation creating a power to prescribe methods of publication of notices relating to events before, during and after the external administration of a company. In essence, the bill provides for the electronic publication of notices on the ASIC website. This will be a more efficient and cost-effective way of providing those notices. It is estimated that about $15 million in additional costs will be saved over the next four years through this process. Those savings will benefit creditors of failed companions because in most cases the notification costs would come from remaining assets of the failed companies.

The bill makes a range of miscellaneous, minor and technical amendments, including requiring insolvency practitioners appointed to a paid parental leave employer to inform the Department of Department of Families, Housing, Community Services and Indigenous Affairs of their appointment, regardless of whether FaHCSIA is a creditor of the company. The bill also provides ASIC with the power to appoint a liquidator to effect the winding up and determine the remuneration to be paid to the liquidator.

This bill implements an important aspect of the government's Protecting Workers' Entitlements package election commitment. For too long shonky businesspeople have hidden behind company structures to rip off suppliers, subcontractors and workers of money rightfully owed to them. They do this by having their company liquidated in order to avoid their financial obligations. All too often they recommence the very same business under a new company structure, often managing to transfer assets from the liquidated company into the new business—all the time without any personal loss to themselves. This is referred to as phoenixing. In the process other Australians lose their hard-earned wages, holiday pay, sick pay, superannuation and long service leave entitlements.

Other suppliers and contractors are also being sent broke in the process because of unpaid work or goods that they have supplied. Over the years I have personally spoken to many subcontractors and many small business operators who in good faith dealt with operators of companies that subsequently went into liquidation, knowing that they were unable to pay their debts but still ordering services and work from other suppliers or subcontractors—knowing, when they ordered work or goods, that they were never going to pay for them. Small business operators would provide work in good faith and in turn be left owed tens of thousands of dollars. In some cases, the money owed to them that was never paid was such that it caused the small business operators or the contractors to go broke. It is one thing for a company to genuinely run into financial difficulties. It is another when the company directors know that they will never pay for the work or goods that they are ordering. I know that we have other provisions within our corporate laws to seek redress from those operators, but it is a matter that is of serious concern to me.

I come back to the issue of entitlements to workers—the wages, holiday pay, severance pay and the like. Even with the General Employee Entitlements and Redundancy Scheme, the GEERS, in place, it can be difficult for former employees of a failed company to be paid their rightful entitlements—particularly if poor records are kept or if the failed company deliberately seeks to avoid its responsibilities. Only last week I was contacted by a constituent in my electorate who came to me to raise his concerns about this very issue. Not only is this person owed money but it is clear that the company involved has deliberately sought to mismanage its affairs so that his ability to claim those funds will be extremely difficult. And, yes, I will do what I can to assist that person, but it is a classic case of the kind of activity that is going on right now and that I am sure is occurring right across the country. Furthermore, employees who do wish to take court action or redress to get their funds out of GEERS in most cases simply do not have the ability, the money or the know-how to go through the court process that is currently required to liquidate the company and then trigger the GEERS. For most people that is something that is not part of their daily work. It is not something that they want to engage in. Usually they are stressed out enough as it is before the process starts, and for them it is just all too hard—all too hard and, in turn, all too unfair.

Last year I was contacted by another constituent in my electorate who is owed thousands of dollars in unpaid superannuation, holiday pay and long service leave by a company that went into voluntary liquidation. This company has recommenced doing the same business, in the same locality, under a different name. The person told me that she lodged a claim with the General Employee Entitlements and Redundancy Scheme and that the directors of the liquidated company had continued their operations under a new business name. This is not an isolated incident, and it is not the only representation that I have had on this issue. I wrote to the Treasurer raising my concerns with the existing laws and with the laws relating to the personal obligations of the directors of failed companies. I thank the Parliamentary Secretary to the Treasurer, who is sitting at the table now, who responded to me on behalf of the Treasurer and provided a very detailed response to my representations to him.

This bill is another step in protecting the community from unscrupulous business operators. As I said at the outset, I am surprised that the opposition have decided not to support it. I am still to hear which specific provisions of this bill they do not support. Quite frankly, if they are not supporting the specific provisions that are in the bill, I have to ask: why not?

I also note that the bill was considered by the House of Representatives Standing Committee on Economics, with a recommendation that the bill be considered by this parliament. So the bill has been referred to the Standing Committee on Economics and their recommendation is that it comes back to this House for consideration. As I have said all along, this a bill that is a step in the right direction in bringing about fairness to people who have been unfairly treated by unscrupulous business operators. I commend the bill to the House.

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