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

We're supporting this bill principally because it adopts a Labor policy that Labor's been campaigning on for many years now, and we're glad to see the Morrison government finally adopt it because it's sensible policy, and that of course is the introduction of director identification numbers for company directors.

The package of these bills delivers two outcomes. It creates a new Commonwealth business registries regime, allowing ASIC and other business registers to be up to date and meet modern requirements. As I mentioned earlier, it also introduces a new director identification number requirement, requiring company directors to provide proof of identification before registering their companies. The introduction of director identification numbers will improve the ability of regulators to combat illegal phoenixing, which costs the Australian economy billions of dollars every year. Dodgy phoenix companies impose an enormous cost on ordinary, hardworking Australians.

Phoenixing of a company occurs when dodgy directors deliberately burn a company in an attempt to avoid their obligations to employees, taxpayers and honest businesses. It occurs, unfortunately, in a number of industries in Australia. You see it quite often when a particular company has a liability to creditors—maybe for loans, maybe for other areas related to insurance, maybe for rectification works—and they shut the company down owing creditors all of this money, owing average working Australians liabilities. They simply go away and establish a company under another name. And because you can't pierce the corporate veil under Australian corporate law and go directly after those directors, because of the notion of limited liability in corporation law, they get away with it. It is one of the most despicable acts that anyone can undertake. But, unfortunately, in a lot of circumstances it is legal in Australia. It's hoped that, with this new requirement for directors to have a number associated with them as they apply for the establishment of businesses and become directors of businesses, this problem will be ameliorated in Australia.

Phoenixing has effects that reach across the community, ruining innocent people's lives and livelihoods. Labor first committed to director identification numbers back in 2017, and has previously moved amendments in the House of Representatives to force the government to vote for a director identification number. Unfortunately, they voted against it. They voted against Labor's proposal to establish director identification numbers. One suspects purely because it was put forward by the Labor Party, not because it wasn't good policy, not because it didn't make sense, not because the Australian people didn't want them, purely because it was put forward by the Labor Party, and that is quite sad. It is quite infantile really when you think about it. It is quite childish and sad. And that's evident in the fact that they have now put it forward in this bill, that it's an integral part of this bill. There is basically no difference between Labor's proposal and this one, but, in what was only an infantile act, they chose to vote against it when it was put forward by the Labor Party.

Labor's previous amendment to the introduction of a director identification number had widespread support from the Australian Council of Trade Unions, the Australian Institute of Company Directors, the Australian Chamber of Commerce and Industry and, of course, the Small Business Ombudsman. The Master Builders Association and various stakeholders, particularly in the building industry, and the small business sector were also supportive of Labor's policy. Stakeholders agree that a director identification number is crucial in helping to combat illegal phoenixing in Australia. The director identification number reform will require directors to actually provide 100 points of identification, allowing regulators to properly tackle the problem at its heart and keep track of people when they attempt to close down companies with liabilities to creditors, and just move on and establish a new corporate entity and hope the whole issue will go away and that nothing will go wrong. Less identification is needed to start a company than to open a bank account. That's a problem in Australia that has led to unfair and unjust outcomes. That needs to be rectified. Thankfully, the government is heeding Labor's advice and doing that through this bill. It's been too easy to fraudulently register directors and too hard to track individuals who regularly engage in fraudulent phoenixing.

Action must be taken to ensure that dodgy directors are accountable. They simply can't be left to continue shutting down companies in order to swindle entitlements from workers and leave suppliers and tradies in the lurch. Make no mistake: these directors have put in place deliberate strategies that are specifically designed not only to defeat their creditors but also to defeat the Australian Taxation Office. Unfortunately, some of them are very adept at it and have been getting away with it for years. It's not uncommon to hear stories of people doing this two and three times.

The Morrison government has finally come to the table on this issue. We support giving new powers to regulators to combat illegal phoenixing. Labor's pressure on the government has seen them backflip and look to implement the DIN and modernise business registries. After campaigning against Labor's policy, it is clear the Morrison government has now accepted the wisdom of Labor's policy and has done the right thing by providing this legislation to the parliament.

I wish to pay tribute to the member for Fenner, who has put a lot of work into this issue and has led the debate and has campaigned for this as part of Labor's economic team. Without the concerted campaign and efforts of people like the member for Fenner and the current shadow Treasurer and the current shadow minister for health, we wouldn't have seen such vocal opposition to what phoenixing amounts to in our economy and what it does to our economy, nor had the spotlight shone on it. I congratulate them. The Treasurer knows he needs to act to protect customers, but he's been dragging his feet. The Liberals have always been slow to act when it comes to this issue. But, thankfully, they are now adopting Labor's policy and have introduced this legislation. It is time the government focused on protecting the vast majority of scrupulous businesses from the harm caused by the dodgy few, rather than avoiding any responsibility.

This bill provides, finally, for the director identification number, with 100 points of identification required prior to being registered under the director identification number system. It will ensure that regulators can keep track of directors when they are doing the wrong thing, not only by their employees—importantly, by their employees—but also by creditors and their customers, and those who have business dealings with them.

The bill also provides for a new Commonwealth business registries regime, allowing ASIC and other business registers to be updated to meet modern requirements. This is an area with a fast pace related to technological change and modernisation of business registries. This will allow ASIC and other business registers to be updated to meet those requirements.

On the whole, I commend the bill to the House. I thank those on the Labor side who campaigned for director identification numbers, and I thank the federal government for finally listening to the Labor Party and the Australian people and implementing this much-needed reform.

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