Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Hansard source

I'm speaking in support of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 amendment moved by the member for Fenner, which calls on the government to begin taking seriously the issue of tackling phoenixing and the black economy:

… including by urgently introducing legislation requiring every company director to be issued with a unique Director Identification Number".

I want to congratulate the member for Fenner for the work that he has done in this area over the course of the last couple of years. He's been working in particular with small businesses, with workers and with members of the Australian public on this issue of the black economy. This work will ensure that the true amount of revenue flows into government coffers so that we can adequately fund the important social services that we need, such as investment in hospitals and Medicare, properly investing in schools, investing in a decent TAFE system so that people get a tertiary education to give them a good start in life, and ensuring that we're investing in universities—all of the areas where we've seen substantial cuts in funding from this government.

We can't simply accept the status quo, that the government just prioritises tax cuts for big businesses rather than tackling some of the issues behind the scenes about businesses paying the right amount of tax and disclosing the right amount of tax. If we're going to build a stronger budget and a fairer tax system, we need to make sure that we're closing some of those loopholes and tightening laws. Instead of unwanted and unwarranted tax cuts for the top end of town, we should be cracking down on those companies and employees who are clearly operating outside the law. That's why we need to put the spotlight on the black economy, which the ABS estimates is costing at least $25 billion. Most experts agree that this figure is growing.

We know that there are dodgy labour hire firms paying casuals cash in hand, which means lower wages for workers, no superannuation contributions and tax avoidance by those companies. We know that the so-called gig economy jobs are inflicting industrial-scale underpayments on many people who are working in these emerging industries. We know that ABN fraud sees the use of multiple or incorrect business numbers to avoid paying tax, to avoid paying clients and to avoid paying workers. And we now know about phoenixing, which is where companies liquidate their businesses in order to dodge the debts that they owe to employees and creditors, and then, hey presto, they pop up a week later operating under a different name—truly unconscionable conduct. These problems have been left by this government for too long, despite a number of calls for reform to be undertaken in this area. You can't be serious about budget repair and stronger surpluses while standing by and allowing this kind of industrial-scale tax evasion to go unchecked. It really is all about priorities. The Turnbull government clearly aren't serious about tackling the blight of the black economy if they're not delving into those issues of phoenixing and looking at issues such as registration numbers for company directors.

It was only in September 2017 that the Turnbull government finally announced that it was taking action on phoenixing activity, including that it would finally introduce some of those reforms that Labor had been talking about for some time, including identification. Because of the slow nature of this reform, dodgy directors have been able to continue scamming honest businesses, employees and taxpayers. At present, the registration of an Australian company simply requires the name, address, and date and place of birth of each of the office holders. It obviously makes it too easy for fraudulent activity and for directors to escape their obligations. The phoenix operators are allowed to run rampant in our economy in areas like construction and labour hire. They're giving good directors a bad name and they're ripping off honest workers. The government needs to get serious about tackling phoenixing and the black economy, including urgently introducing legislation requiring every company director to be issued with a director identification number.

The case for such a move is clear. In requiring prospective directors to quote their numbers when incorporating a new company, ASIC would then be able to be given a detailed picture of the company and its management. With more information and more transparency, dodgy directors can be tracked via ASIC and through other government agencies. The unique identification number is also crucial for small businesses and liquidators to access information on directors, including accurate information about director histories. Yet the government hasn't clarified whether acquiring a director identification number will require a 100-point identity check—a fundamental aspect of the proposal that was announced by the Labor Party last year. The government keep missing deadlines on a register of beneficial ownership—something that they're yet to commit to publicly.

Questions also remain over the public release of updated modelling of the costs that dodgy directors impose through phoenixing activity. The Turnbull government is continuing to use figures from five years ago. Despite receiving updated costs in 2015, the 2012 estimate put the cost of phoenixing at up to $3 billion a year. The question needs to be asked as to why the government isn't using those updated figures. One suspects it's because the nature of that activity has grown and, indeed, the scale of it in dollar terms has grown as well.

Labor is serious about tackling the scourge of phoenixing on our economy. Labor has been calling for the introduction of a director identification number for well over a year now. We've seen the backing of director identification numbers from a number of organisations: the Productivity Commission, the Australian Institute of Company Directors, the Australian Small Business and Family Enterprise Ombudsman, the Tax Justice Network, the Australian Chamber of Commerce and Industry, the Masters Builders Association, the ACTU, the Australian Restructuring Insolvency and Turnaround Association, the Phoenix Project—a group of experts from Melbourne Law School, and the Australian Institute of Credit Management. It's clear that there's industry support for this proposal. It simply makes sense and it simply makes sense to do it properly. For the sake of Australian taxpayers, workers and honest businesses, the Turnbull government should take a fulsome approach to implementing this director identification number. We know that, although the Turnbull government are committed in some respects to the identification numbers, they've delayed implementation due to the modernising business registers measure in the budget. They haven't given a time frame, and it's clearly not a priority in terms of registration numbers for directors.

We know that ideology has been overlooking facts and figures on these issues when it comes to the budget, in particular, and some of the calls from people in the industry to crack down, particularly on phoenixing activities around labour hire. Instead of focusing on the checks and balances on government, there's no consideration given to the checks and balances on the power that dodgy businesses have over driving the black economy and the effects that can have on workers, families and, in particular, small businesses, who often rely on regular turnover and payment of invoices to ensure they can continue to survive. There's no prioritising cracking down on those who are clearly avoiding community obligations.

We have seen plenty of announcements and talk from this government but when it comes to action it's been quite scarce. It took Labor, really, to put this issue on the agenda. The member for Fenner and the shadow Treasurer have been pushing these amendments and changes for some years now. For the sake of Australian taxpayers, workers and honest businesses, the Turnbull government must implement Labor's director identification number proposal in full. It's time that the government ditched the tax cuts for the big end of town and it's time they started getting serious about shedding some light on the black economy, cracking down on some of those companies that are undertaking these activities—particularly in that area of phoenixing and, of course, the wrong payment of invoices, which are some of the activities that have been identified in the explanatory memorandum to this particular bill.

But, aside from that, I again reiterate the amendment that was moved by the member for Fenner regarding the introduction of legislation requiring every company director to be issued with a unique identification number. That is a big step towards cracking down on some of this phoenixing activity and ensuring that the right amount of taxation revenue comes into the budget to properly fund services in health, education and tertiary training.

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