Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

The Greens support this bill, the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019, but we wholeheartedly agree with the Labor Party that it doesn't go far enough. We know phoenixing is emerging as a significant issue in the building industry, and a huge part of that has been around the cladding crisis—the flammability and the dangers around dodgy cladding. For those who aren't following the debate in detail, phoenixing activity quite simply is when a new company is created to continue the business of a previous company that has been deliberately liquidated by its owners to avoid paying its debts or meeting its liabilities. Those liabilities and debts can relate to creditors, can relate to payments to subcontractors and can relate even to wages to staff and to workers.

Nationwide, phoenixing across the board has been estimated to cost $5.13 billion a year in unpaid bills to trade creditors, in lost employee benefits and in unpaid taxes, all of which affects the economy in this country—even the parliament in this country, the laws we pass and how we operate. The best example that's probably brought this to the public's attention—and I have no doubt has led to this federal legislation that we're seeing today—has been the crisis in Victoria, where this has been a huge issue for at least 12 months now. The Hickory Group is a prime example. Twenty-five properties built by Hickory Group have been identified by the Victorian Statewide Cladding Audit as being non-compliant or having non-compliant cladding. At least 17 of the company's non-compliant buildings, some of which have hundreds of apartments, have been rated at high risk or extreme risk of fire.

As of September 2019, Michael Argyrou of the Hickory Group had been a director and/or secretary of 40 companies which are now deregistered. Two more of those companies of which he was a director are in administration, and three are in the process of being struck off the company register after the company sought voluntary deregistration. George Argyrou, the Hickory Group's joint managing director, is a former director and/or secretary of 27 deregistered companies.

The Hickory Group is winding up three of its companies, while two more remain in administration. One, H Buildings Pty Ltd, was wound up, owing its secured creditors $100 million and paying out its unsecured creditors just 0.4c in the dollar. H Buildings was facing up to 13 claims for rectification works in the Victorian Civil and Administrative Tribunal, four of which were cladding related, when it was placed into voluntary administration in August.

People who buy these apartments in good faith are tearing their hair out dealing with these dodgy building companies and the cladding crisis. These companies are essentially shirking their responsibility and forcing desperate people living in apartments covered, effectively, in highly flammable materials like petrol to start an expensive pursuit of these companies and their directors through the courts.

We have an opportunity, especially after the Victorian government brought it to the federal government's attention last year. They looked at Victorian state laws, and Daniel Andrews is on record as saying that he needed federal government assistance to take a federal approach to this issue. That no doubt has led to the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019, which is before us today.

The Greens will be moving an amendment in the committee stage, and our amendment effectively does two things. The first is to look at, essentially, a chain-of-custody approach to materials that are either illegal and have been installed illegally or potentially dodgy and present a threat or are dangerous to owners of these buildings. We would like to create a duty for directors and officers of corporations that design, manufacture, import, supply or install external wall cladding products to take all reasonable steps to keep up to date with new cladding products and standards and to understand the safety risks, and to take appropriate steps to minimise and remove those risks. This, we believe, will help stop directors like we've seen with the properties built by Hickory Group.

The second, and I think most important, part of the amendment gives the courts the power to disqualify a person from managing corporations for up to 20 years if they are a director who engaged in phoenixing activity, and that can be determined using the existing framework of the act; the company, at any time, designed, imported, supplied or installed wall-cladding products that were non-conforming according to the National Construction Code; or the court is satisfied that the disqualification is justified with regard to their conduct or any matters the court considers appropriate.

I understand Labor have put up their own amendments, which, of course, take this bill and the punitive measures in this bill further. If we're going to bother with federal legislation, we want federal legislation that's got teeth and will provide a disincentive to dodgy behaviour. We don't want to see companies that have installed non-compliant cladding getting away with it, as they have been. This amendment could be prospective looking forward, but then what do we do about the thousands of people and apartment owners seeking justice against directors and companies that may have, in some cases, knowingly put cladding on a building when they knew it wasn't fit for purpose? They may have well done that for their own reasons around their own profitability and costs, so we would prefer to see retrospective legislation with regard to these increased penalties.

If you look at the behaviour of the building industry itself and some of the public statements that have been made, they're happy to see this kind of activity crackdown, but notice that they don't want it to be retrospective, particularly in Victoria. On 26 November last year a story appeared in The Age about how the Master Builders Association wants an amnesty for builders to come forward and report potentially deadly flammable cladding without fear of prosecution. So, instead of facing the music, the peak industry body wants every single building company that has installed this dodgy stuff to get a free pass. We shouldn't allow that to happen. The parliament, we believe, needs to give the courts and ASIC the ability to go after these dodgy building companies fearlessly. Retrospective legislation is one important way to short circuit this phoenixing crisis in the building industry, and we believe, if we're going to have legislation here today—just to reinforce this point—it needs to have teeth, it needs to be a disincentive for dodgy behaviour and there needs to be consequences for breaking the law.

We believe, with the bill before us today, this is a very unique opportunity to have a strong, all-of-government response to the cladding crisis around this country. We don't know how deep that's going to go or how many companies haven't come forward, but we suspect that we're going to need billions of dollars to fix this colossal market failure, much of which, we believe, should come from a levy on the companies responsible. In the absence of that, or even with that, regular people, indeed the courts, require the ammunition and the toolbox to go after these dodgy builders, and we believe our amendment provides a simple way to give that to them. I would urge that all senators consider the Greens' amendment. I think my colleague Senator Faruqi will be talking to that further in the committee stage. So I urge all senators and all parties to consider supporting the Greens' amendment, and let's bring these dodgy directors of building companies to justice.