Deborah O'Neill (NSW, Australian Labor Party) Share this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019. I've been in the chamber for just a couple of minutes to hear the contribution of my colleague Senator Sterle, and I wholeheartedly support and endorse his comments. This is a problem that real people around Australia see every day. This government have been in for nine years—or is it eight years? It feels like forever! They've been in for so long, for three terms of government, when they could have actually solved this problem. The sad reality is: this is just not a priority issue for this government. For far too long in this country, phoenixing directors have attempted to circumvent justice and creditors by stripping their companies of assets and resurrecting them again under other names to escape their obligations. The new businesses perform in and operate the same kind of business as that of the companies that were liquidated but with none of the pre-existing liabilities. It's like going to a shopping centre: you load up your trolley with goods and you don't pay for them; you just walk away. It's just not adequate. It's absolutely not satisfactory. This leaves creditors—usually small businesses, contractors and employees—with nothing while shonky directors escape without any penalty.

The matter of phoenixing arising from a supposed death—which is not a real death in the case of many of these businesses—is especially pernicious in the construction industry. One part of the construction chain goes bust and runs away. It can jeopardise an entire project, risking investment and, importantly, jobs, particularly for so many small-business owners who are subcontractors in the construction industry. They employ people in their local communities, particularly in regional Australia. It impacts powerfully in the most awful way. Families and businesses need better regulation from a government that thinks it can just show up and do nothing to assist the hardworking people of this country.

ASIC commissioner, John Price, said a few months ago that the current laws, on the watch of this government, make it difficult to pursue directors who liquidated a company to phoenix and avoid debt. Commissioner Price also stated that there is currently a lack of legislative definition, which makes it very difficult for the regulator to do their job. The legal loopholes over which this government has presided must be shut and confidence needs to be returned to our small-business sector. Every day we delay and every day we allow another dodgy director to get away with more money being lost to our small businesses, more contractors, more investors and more creditors are being ripped off.

As my colleague in the other place Dr Andrew Leigh said, business runs on trust—it's the oil in the wheels of commerce, but phoenix activity puts sand in the gears and makes it harder for good businesses to just get on and do the job. This malicious practice costs the economy around $5 billion annually, including $3.2 billion in unpaid bills, $300 million in unpaid employee entitlements—that's a conservative estimate—and $1.7 billion in unpaid taxes. In addition, there are compliance costs, according to the report from PwC.

The Labor Party, in opposition, have been calling for action on these shonks for years—not just since the recent election but for years. We've been calling for the government to act, but we've seen a government that have dithered again and again, refusing to support small businesses and employees by bringing an end to this malfeasance. You have to wonder what it is that they show up to do here every day when they can't even look after something as simple as this: a small change to make it possible for this practice to disappear from the Australian economy. What are they doing here? What are they doing here apart from some great PR job about how they care about small businesses—all the small businesses that they presided over that have been going down the tubes over the last three terms of their government. There's a gap between reality and the lies that we see from this government.

This bill was allowed to lapse before the last election and has been continually delayed since then.

Industry groups have been calling for reform for years. Back in 2017, a report by academics from the University of Melbourne and Monash University called for action from ASIC and the parliament to crack down on pre-insolvency advisers who have a business model of giving business owners advice on how to avoid their creditors—a shameful business practice, but a growing business sector under the watch of this government. Advocates have also called for director identification numbers as well as greater transparency on director history and the removal of fees for ASIC searches. Basically, this is so you're known. All they have to do is make sure the directors are identified and that their history of practice in business is accessible to people who can do a search through ASIC. That's what is being asked for—that simple process. Technology allows it. The will of business wants it. But this government is found wanting and lacking in action.

In the three years since that crucial report landed, these issues have been continually postponed, delayed and allowed to lapse by a government that lacks the will, the wit and the wisdom to act in the interest of small business. Just like with the banking royal commission, the government is refusing to ensure integrity in the business sector by failing to act. The government are incapable, it would seem, of being moved to action on anything except persecuting their enemies and doing the bidding of their very big business mates—at the cost of small businesses right across this country.

While this bill does take many of Labor's points and recommendations, it's likely to have a limited impact as it has been constructed by this government due to the watering down of appropriate recommendations made to the government. The bill takes recommendations from industry leaders and victims that have been crying out for action and it outlines measures to introduce a new offence to prohibit creditor-defeating disposition of company property, to penalise those who engage in or facilitate such dispositions and to allow liquidators and ASIC to recover such property. The bill allows the commissioner to collect estimates of anticipated GST liabilities and make company directors personally liable for their company’s GST liabilities in certain circumstances. The bill also authorises the commissioner to retain tax refunds where a taxpayer has failed to lodge a return or provide other information to the commissioner that may affect the amount the commissioner refunds. This ensures that taxpayers satisfy their tax obligations and pay outstanding amounts of tax before being entitled to a tax refund.

I and the Labor Party are supportive of these sensible measures to address fraudulent phoenix activity, and that is why I also support the director identification numbers as a crucial and overdue reform. During the last election, Labor committed itself to director identification, because it knows that this will allow the regulators to track directors who regularly engage in phoenix activity. The measure is supported by relevant stakeholders who have a deep and abiding interest in this issue, such as the very active Australian Council of Trade Unions, who stand up for workers across this country day in and day out. Thank God somebody is standing up while this government is presiding over the abandonment of small businesses and the workers who are employed in them. The Small Business Ombudsman supports this change. Sadly, the changes that are recommended by both the ACTU and the Small Business Ombudsman—an appointee of the government's own choice—are missing from the original bill from the Morrison government. We cannot continue with half measures to combat this phoenixing problem.

It's clear where the government's priorities are if one takes a glance at last year's legislative schedule. What was on this government's agenda? Smashing workers and their representatives with their farcical and absolutely disgracefully named ensuring integrity bill was on this government's agenda. That is what they wanted to do, not to look after companies that needed protection from shonks who seek to exploit them. The government had on their agenda brutalising sick refugees by repealing medevac laws that allowed refugees in a critical condition to receive needed medical care. This is a government with no decent agenda and no plan of benefit for the Australian people.

Half the coalition room yesterday spent the day of condolence squabbling amongst themselves rather than focusing on the reality of constituents, across this great nation, whose homes were destroyed by blazes. And when we see Senator Bridget McKenzie continue to lead the Nationals in the Senate, even after being forced to resign from the cabinet in disgrace, we have just a small indication of the chaos that exists within this government. This Morrison government, this third-term Liberal-National government, has no plan to deal with things that matter to Australians, no plan for climate change and no proper plan to respond to the bushfire disaster, where they were found not only absent but profoundly wanting. They have no plan to deal with stagnant wages. They have no plan to sort out the chaos in their own midst. Instead, they have delayed until now a real plan to crack down on dodgy directors, despite nine months passing since their re-election.

This is not the first time the government has passed the buck when it comes to measures that significantly affect the construction industry. The Morrison government and Minister Andrews consistently refuse to support federal funding to remove cladding and delayed—for months—a national approach to the building certification crisis. So if you're a tradie out there and you bought the nonsense from this government that they're there for you, this bill shows you how wanting they have been for three terms. People in business who build and construct roads, buildings, infrastructure vital to this nation, have been abandoned by this government for nine years, and no amount of PR from Mr Morrison—who has great marketing experience but not enough capacity to lead the nation—should persuade any tradie across this country to vote for the Liberal Party ever again. They abandoned you. The consequences are known to you by people who are in your industries, who have been subject to the sort of sham business practices of those who've been allowed to continue to phoenix while this government's twiddled its thumbs. This government kicked the issue to the states and abdicated its moral responsibility to look after homeowners, refusing to work collaboratively with states to ensure that a disaster like Grenfell doesn't happen again.

Labor supports a statutory review into phoenixing that will provide evidence for future reforms to phoenixing law and additional support for the regulator's enforcement processes. We cannot just chip away at the sides of the issue and announce 'job done' like this bill, apparently, wants to convey. What we need to do is give ASIC the powers to tear dodgy directors out of the system, root and branch. Every year that we delay a fulsome, robust and honest response to this problem facing Australian small business is another $5 billion out of the pockets of taxpayers and contractors. That's $5 billion not moving around in our economy, because this government is too lazy and distracted by its own internal problems to get on and do the job of governing in the interests of the Australian people. We need to continue the fight against the black economy, certainly, and we need to keep the ball going on reform. The director ID number reforms have been kicked into the weeds too many times and I'm glad that we're finally getting some movement on this issue from those opposite.

Labor will continue to take the lead from opposition—and that's a pretty hard thing to do—against dodgy directors and we will continue to drag this very lazy and distracted government kicking and screaming with us until they crack down on shonky operators and other lurk merchants. We must do better. These commonsense measures are about protecting business, protecting workers and protecting the Australian taxpayer from being short-changed, from being ripped off by those who care nothing about the interest of the community in which they operate.

We stand with industry groups. We stand with hardworking Australians. Labor stands by people who play by the rules. Finally, this government moves slowly towards cracking down on those who would rip off Australians. Well, we're watching, we're pushing and we will not let this government off the hook. Small business knows Labor is standing with them for fairness in the workplace.