Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

I'm delighted to rise in this place to speak in favour of the Commonwealth Registers Bill 2019. Before I launch into some of my contributions in this debate, I'd just like to acknowledge some of the contributions of Senator Roberts from my home state of Queensland. Can I say to you, Senator, I, through the Acting Deputy President, agree wholeheartedly in terms of the need for this country to keep the spirit of competitive federalism, absolutely. I also agree that the people whose information is contained on any of these registers should have the right to rectify any mistakes in a clear procedure where they can make sure that there isn't information contained on these registers that is against their best interests.

But I do say to you: it is a good thing that we are consolidating some 35 registers under this regime and we don't have 35 registers being operated by each of the six states in this country. I think that would impose a great burden on Australian business. So I think we're moving in the right direction with this legislation. I really do. That is reflected in the context of these amendments. The Australian government has committed to simplifying its interactions with business to support growth, innovation and employment to make it easier for people to do business in this country, not harder.

The National Business Simplification Initiative announced in 2016 aims to reduce the time that business spends complying with regulations and interacting with governments so they can focus on growing their business, creating more jobs and developing new products. This nation needs to have a laser-like focus on the creation of new jobs as we build this bridge through the pandemic to recovery. We need a laser-like focus on the creation of those new jobs.

This new law facilitates that by setting up a modern government registry regime that is flexible, technology neutral and governance neutral. The regime initially applies to the businesses administered by ASIC and the Australian Business Register. If you needed any reason to know why this legislation is required, all you need to do is to look at the list of registers that are covered by this legislation—the Australian Business Register, the ACN register, the business names register, the Australian registrable bodies register, the Australian registrable bodies and foreign companies register, the reserved names register, the managed investment scheme register, the company charges register et cetera, et cetera; 35 of them. You can see why there's a need for legislation such as this.

I would like to place on the record my appreciation certainly to all those members of agencies and departments who've been involved in this consolidation project. There are actually 49 pages of consequential amendments arising from this legislation, 49 pages of different sections of legislation that are being amended to put this legislation in effect. That constitutes a great workload which has been conducted and delivered by the servants of this nation who work for the good of this country. I really do congratulate each and every one of them for being involved in that project.

As well as the consolidation of the governance of these 35 disparate registers, another important aspect of this legislation is the Director Identification Number. This is something that was proposed in the 2015 Productivity Commission report entitled Business Set-up, Transfer and Closure. That report referred to the fact that, as my friend Senator Watt from Queensland referred to, the issue of phoenixing is one which impacts Australians all across the country. I know that this has been the subject of different Senate committees and inquiries—and my friend Senator Whish-Wilson has been involved in many of those inquiries. And I congratulate all the senators who have been involved in those inquiries and made those recommendations. I've been listening to your contributions to this debate.

Illegal phoenixing is a scourge—and absolute scourge. It impacts on small businesses, employees and taxpayers, because every action of illegal phoenixing, which means that employees aren't paid what they're entitled to, means the federal government has to stump up and do what the owners of those companies should have done to meet those employee entitlements under the Fair Entitlements Guarantee scheme. This is an important plank in building our response to illegal phoenixing, but this government has taken action in order to combat illegal phoenixing.

Under the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020, which I spoke for, new phoenixing offences were introduced. There was a prohibition of backdating resignations or leaving companies directorless, which was a key component of the illegal phoenixing strategy. I think it was quite unfair for my friend Senator McAllister to yesterday criticise the federal government for not taking action, because the record is that the government has been taking action over the last several years. That also includes the establishment of an ATO taskforce set up to combat illegal phoenixing.

With respect to the director identification number provisions contained in the bill, each director must have a specific number—a unique identifier. That director identification number will follow that director, and the regulators, administrators and liquidators will be able to follow whether or not a director repeatedly keeps turning up as a director of companies. I want to draw out how effective this could be in the context of illegal phoenixing activity. There was an example given in the Productivity Commission's report in 2015 of a labour higher business which had negligible assets and a turnover of $30 million per annum which fragmented its operations across 53 related companies. It lodged accurate BASS statements for all the companies but failed to remit the required amounts under the PAYG system. The single company director—one director across 53 different companies—then liquidated every one of those 53 companies within a week and moved his workforce of 2,700. This wasn't just a small one-off commercial establishment. There were 2,700 employees. He moved his whole workforce of 2,700 into eight new entities—eight new companies—and continued trading. He has since fled Australia. Over $8 million in taxes remain unpaid and this labour hire business was still trading and failing to comply with its obligations at the time that the Productivity Commission actually delivered its report. I think that is a great example of how a director identification number could be used to combat that sort of behaviour.

How? This bill contains a number of offences and civil penalties in relation to the director identification number. First, the obligation is that you actually apply for a director identification number, if directed by the registrar. The maximum penalty for not doing so is 60 penalty units under criminal law or a civil penalty unit greater than 5,000 penalty units or three times the benefit derived or detriment avoided because of the contravention. So there is both a criminal element and a civil element to the penalty, and that is absolutely appropriate.

The rogue—the ratbag, whatever we want to call him—who set up those 53 companies and then liquidated them and moved to the other eight companies, would have been required to apply for his director identification number before he set up even his first company. When he set up the second, he would have had to apply the same director identification number. If our rogue wanted to apply for an additional director identification number, that would be an offence under this legislation. If our rogue wanted to misrepresent a director identification number, that would also be an offence under this legislation. If someone acted as an accessory to help him in establishing this convoluted scheme—and, based on my experience, it's difficult to set up 53 companies or, in this case, 61 companies, without the assistance of some people—then they would have also committed a contravention under this legislation.

So, as Senator Whish-Wilson referred to yesterday, we have to move away from a situation where we have directors with names such as Elvis Presley and Bob Marley. I wish some of these great performers of the past could return to the stage of today rather than the stage in the sky—I truly do. They are some of my favourite performers. I wish they could reappear in today's society. Absolutely. I listen to their works quite often. It would be laughable if it weren't so serious. It really would. As Senator Watt said, it is easier to become a director and be registered in this country than it is to register a dog or to get a library card or to rent a DVD, if anyone does that any more. I'm not sure they do. I'm showing my age! It's harder to do all of those things than it is to actually become a director and take on all those responsibilities under the Corporations Act.

We're talking here not just of fictitious directors, people who don't exist, but also vulnerable people who are persuaded, by whatever means, to become directors of companies. The fact that there will be a verification and authentication process in this regard will make it harder for the rogues who are out there to use their manipulative techniques to convince people to expose themselves by becoming directors. That is a really important part of the scheme.

So I'm extremely pleased to have the opportunity to speak in favour of this bill. I have heard and reflected on some of the comments that have been made about the time it has taken for this legislation to be considered in this place. It gave me cause to reflect on the fact that Minister Hunt as Minister for Health has often alluded to the fact that we've introduced the telehealth scheme, which we thought would take 10 years, in 10 days. Maybe we should look for other opportunities where we can expedite the introduction of legislation to deal with a whole range of matters that are in the best interests of the Australian community.