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

Just to summarise, it's taken 16 years to get a process in place and a legislative outcome in parliament to provide director identifying numbers in this country on our business register. At the same time we're going to get a modernisation of our business register and a reform that sees the ownership of this register and the management of this register transferred from ASIC to the Australian tax office. It's taken 16 years of talking to get something as simple and important as a verification process, an authenticity process, in place that provides transparency in corporate Australia as to who is actually the director of a company so that we can have faith and confidence that those directors are genuine.

I want to raise in my contribution today another legislative reform that's essential to providing transparency to help prevent against tax evasion and to help prevent against misconduct, phoenixing—a whole range of corporate misconducts that we often talk about in this place. And that's the introduction of a beneficial ownership register in Australia. This is something that the Greens have been campaigning on for some time as well as a number of stakeholders around the country who want to see tax justice, who want to see the rorts cracked down on. I'll just read for senators a very brief comment from Michael West, who does fantastic work on exposing some of the rorts that we have in our tax system, the companies that often get away without paying tax and, more importantly, the solutions to help fix these issues. Michael says:

What is the point of a beneficial ownership register?

For those who have not had the pleasure of acquaintance with a beneficial ownership register, the point of a beneficial ownership register is that if people are required to disclose what they own, the things they own will be taxed more effectively.

Pretty simple really. Rather, it seems:

Better to hide them, make up silly names and concoct tortuous transnational structures which nobody can decipher. Better to stuff money into tax havens.

To put it another way, the point of not having a beneficial ownership register is therefore to facilitate tax evasion and allow corporations and wealthy investors to conceal their assets.

It might interest the chamber that it's not just the Greens that have been campaigning to have a beneficial ownership register put in place in this country to provide transparency on matters related to tax evasion and other unethical behaviour. Previous member of parliament and minister for finance Kelly O'Dwyer is also on record as having public support for a beneficial ownership register. She is not only on record; she instituted a process so that we could actually have legislative reform in this area. She announced a consultation paper in 2016 and said that a public register would greatly benefit in the fight against tax avoidance. Minister O'Dwyer at that time said:

Improving transparency around who owns, controls and benefits from companies will assist with preventing the misuse of companies for illicit activities including tax evasion, money laundering, bribery, corruption and terrorism financing.

But surprise, surprise: large parts of the corporate sector in this country, including tax lawyers and others, have strongly opposed the government's plan to establish a register and have lobbied very hard to prevent this from happening.

I've put a number of questions both directly to the Australian tax office and to Treasury at estimates, on notice and in Senate inquiries as to why this reform has never eventuated. I suppose I should take pause for thought that it took 16 years of this issue being raised in parliament before we actually got something as simple as a director identification number. But I want to tell the senators who are interested in this debate what Mr Chris Jordan said when I asked him about his views on a beneficial ownership register. He had a slightly ambivalent view on the need for it. He accepted that anything to do with increasing transparency was good. However, he said:

A register of beneficial ownership is just, you know, what someone says someone else owns so, you know, it could be good but it could be just a lot of 'stuff' that doesn't really help us.

But the important point was what he said next:

Because if, you know, people want to do the wrong thing they'll be putting all sorts of different names in places, so I'm not sure it's a panacea as such.

Stop and reflect on that: putting different names in place. The whole point of the legislation before us today is to take away the ability for dodgy operators to put up dodgy names as Australian company directors.

I said yesterday that if you go to the Australian Business Register and look up company directors you can find Elvis Presley as an Australian company director. You can find Bob Marley, not to mention Homer Simpson and a whole range of interesting people who are registered as company owners in Australia. That's going to stop if we, hopefully, pass this reform in the Senate today. When we have a modernised registry, we have the technology structures in place and we have the ability to give a company director an identification number for life, it will make it a lot easier and a lot more effective to therefore have a beneficial ownership register. I hope that this is just one of many steps in place to see that legislation come before parliament.

I would finally like to cover where we're at with a beneficial ownership register. I last asked about this issue in October estimates last year. I put it to Treasury. I said that I understand the government is committed to the G20 high-level principles of beneficial ownership transparency. And I should point out that this is not just an issue in Australia. It's a huge issue in the United Kingdom. They've continually dodged legislation to bring in a beneficial ownership register. You can only guess why. There have certainly been a number of allegations around the fact that this government and the UK government are simply protecting their donors and tax evaders.

But I asked a question around the international push and whether we were complying. Our commitments made under previous Minister O'Dwyer were specific commitments to begin work to implement a government decision on transparency of beneficial ownership companies. I wanted to know exactly what the government's decision was going to be, and the process. The answer I got was that, yes, the government is committed to enabling regulators and law enforcement agencies to tackle illicit activities, such as tax evasion, terrorism, financing and money-laundering, by giving them access to information on who owns and controls companies, allowing authorities to follow the money and to reveal the natural person that ultimately benefits from a company.

But this was part of the government's Open Government National Action Plan in 2016-2018—a plan that expired more than two years ago. I have continually put questions to Treasury, asking: 'Where are we with this? What's happening?' And I get complete and total nonanswers back, as in: 'Government decisions are in that plan, and that's two years old. Take that up with the government.' In other words, there is no momentum in this country at all for a beneficial ownership register.

Now, the government did consult publicly on this in 2017. Apparently they have consulted on a number of options to improve beneficial ownership transparency, including the establishment of a central register. But the government needs to commit to this, to step up and to make it happen. I hope that Senator Hume, in her contribution today, will be able at least to respond to this as to where we are with the beneficial ownership register. I know she had a lot of respect for Minister O'Dwyer, who personally wanted to see this register put in place. I even note that previous senator George Brandis supported this initiative.

But, lastly, having director identification numbers in this legislation today will make it a lot more effective and easier to have a beneficial ownership register. I will finish my contribution on that point.

David Van (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Commonwealth Registers Bill 2019 and its associated legislation today. Despite the volume of legislation before us, I know just how important this initiative is.

Before I go into the details of the bill, I would like to recognise this government's continued commitment to ensuring that Australian businesses can survive and thrive in these difficult times. As many people here know, the Morrison government has introduced a number of initiatives to cushion the economic impact of the coronavirus and to help build a bridge to recovery. A total of $260 billion is being injected into the economy by our government in order to keep Australians in work and businesses in business. This includes $83.7 billion for the government's economic stimulus package, $90 billion from the Reserve Bank of Australia, $15 billion from the government to deliver easier access to finance and, lastly, the $70 billion JobKeeper payment. This economic support package is equivalent to 13.3 per cent of our GDP.

The government is taking this unprecedented action to support small businesses, tradies, employees and those who are facing tough times ahead. Support covers casual workers, sole traders, small and medium businesses and also industry sectors, such as agriculture, aged care, universities and of course health. It also covers regulatory protection and financial support for businesses to stay in business, giving them the breathing space to work out the best way to keep their businesses moving.

Through the government's $40 billion SME guarantee scheme, we will support small- and medium-sized business enterprises to get access to working capital to help them get through the impact of the virus on their business. The scheme will complement the government's initiative to cut red tape to allow SMEs to get access to credit faster. It also complements announcements made by Australian banks to support small businesses with their existing loans. This builds on the support for business and business investment provided in our economic support packages. That includes increasing the instant asset write-off and, now, extending the $150,000 instant asset write-off for six months through to 31 December 2020. It also includes backing business investment by providing accelerated depreciation deductions. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.

So, what would these bills do? These actions address the most immediate and pressing needs of business as a whole in these challenging economic times. But we on this side of the chamber are looking ahead to ensure that the economic circumstances recover and that doing business is easier into the future, and these bills help do that. As the Productivity Commission's 2015 report Barriers to business set-up, transfer and closure noted:

While it is relatively easy to start a business, a number of longstanding issues with specific regulatory requirements, regulator engagement and funding remain unaddressed. These make entry for some new businesses unnecessarily complex or costly.

Part of the challenge is the need to register and then re-create information needed to register a business. This can cover Commonwealth, state and local government requirements and requires new businesses to expend enormous amounts of time and money to complete. Initiatives such as the Australian business account initiatives and the Australian Business Licence and Information Service have helped overcome some of the information challenges that businesses face in understanding the requirements of registration, licensing and permits at all levels of government.

But they also lack the capacity to share data and information easily. We cannot go on having multiple business registers all over government. By some accounts, in the Commonwealth setting alone there are numerous types of regulatory registers that businesses may have to register on, depending on their circumstances. To me, as a previous small business owner, that is absolutely crazy and creates a red-tape burden full of time-wasting and duplicative effort by business owners. That may be alright for businesses that can afford to employ people to help them with that, but it is an expensive and time-consuming process for small business, especially if they also have to deal with state and local government registration requirements as well.

These bills, modernising the business registers, will address registry fragmentation, improve business user experience, reduce risks to ongoing operations, foster data-driven innovation and enable better use of registry data. They might even build upon the great work already done in the business account and business licensing initiatives. Just imagine a business registration that allows Commonwealth agencies to share ABR data and allows state and local governments to incorporate ABR data into their systems to improve the experience for new businesses starting up in their jurisdictions.

To achieve this, the IT infrastructure underpinning Australia's business registry services needs to be addressed to meet demand for registry services now and into the future. No longer can we have government IT systems designed in such a way that they are bespoke, are increasingly complex and cost extraordinary amounts of time to change or modify. Some systems can take up to 40 days of testing just to modify one line of code, because they are so complex and interdependent in their design. We have to be able to create an environment where data can be processed, shared and updated easily, to the benefit of government, business and the community as a whole.

To facilitate the implementation of the new registry system, a legislative package has been drafted that creates a new regime that is flexible, technology neutral and governance neutral. With this approach, the registrar will have the flexibility to make data standards that determine what information will be collected, how that information will be collected and the manner in which the information will be maintained. The registrar can make a disclosure framework to provide the basis for disclosing protected information to the public. The disclosure framework is designed to replace a one-size-fits-all approach to publicly available data to one where information is disclosed by using a risk based approach.

The government acknowledges that while directors and companies have needed the breathing space to deal with the impacts of coronavirus, there are still those who have a history of continually breaking the trust of consumers, employees and partners. This legislation seeks to address this abuse by introducing a requirement for each appointed director of a registered body corporate to have a director identification number, a DIN. The objective of the new DIN requirement is to promote good corporate conduct. In particular, it will assist regulators to detect and address unlawful behaviour and, through doing so, deter such behaviour. The DIN will be a unique identifier for any person who consents to being a director and verifies their identity. The person will keep the DIN forever, even if their directorship with a particular company changes. This, too, is an important initiative that also came from the Productivity Commission's report that argued for greater transparency and accountability of directors who sought to avoid their obligations through the insidious practice of phoenix companies.

In my concluding remarks, let me reiterate just how important this initiative is for Australian business. By reducing red tape to make it easier for business, improving shared data and information sharing at all levels of government, and by helping the better governance of business, the Morrison government is making it possible for businesses to thrive in these difficult economic times. I also acknowledge the hard work of those current and former public servants across government who have striven over the last three-plus years to see this initiative through. While in recent weeks it has been fashionable for the opposition to berate the Treasury portfolio, teams from across the Australian Business Register, ASIC, the ATO and the departments of industry and Treasury, have worked tremendously hard to overcome numerous hurdles and bring this initiative to life. It is through their hard work and professionalism in dealing with such legislative complexity that the government can deliver on its promise to modernise Australian business registers and ensure that there is a modern, effective and efficient registration regime for businesses into the future.

Murray Watt (Queensland, Australian Labor Party, Shadow Minister for Northern Australia) Share this | Link to this | Hansard source

I rise to speak in support of the Commonwealth Registers Bill 2019. In doing so I want to focus on one measure in particular, and that is the introduction of a director ID number, which will require company directors to provide proof of identification before registering companies. This is something that Labor and many industry and union groups have called for for some time, and I'm glad that finally we are seeing some action from the government on this point.

I've spoken a lot about this issue, both in this term and in the last term of parliament, because it has particular relevance to a number of regions in my state—in particular the Gold Coast and the Sunshine Coast where, unfortunately, for many, many years we have seen rampant phoenixing of companies, particularly in the construction industry but also in a number of other industries, including the security industry and contract cleaning. One of the things that I've said in talking about this issue in the past is that in the absence of a director ID number it's actually easier in Australia to register yourself as a director of a company than it is to register a dog. When you think about the responsibilities of company directors and the potential for ordinary people to be defrauded by rogue company directors, that is ridiculous. For a long time, we have needed to put in place much stricter restrictions around who can register a company and the ability to trace them. As I said, the issue of phoenixing is a rampant problem in my home state of Queensland, particularly on the Gold Coast and Sunshine Coast.

Just as a quick reminder: what we're talking about is the ability of company directors to rack up big debts, whether it be to suppliers who supply goods and services to them or to subcontractors who come and do work for them. The big developer or the big building company will get people to do the work, owe them some money then close down the company, strip the assets out of it in doing so and move those assets to a new company. Then the company director gets on with life but leaves a trail of destruction behind them in the form of suppliers and subcontractors who have provided services, probably incurred debts themselves in doing so, but remain unpaid. I've met many small, usually mum-and-dad businesses, particularly on the Gold Coast but also the Sunshine Coast, who have been forced to shoulder unsecured debt and have been left in the lurch by big construction companies who go bust without paying their bills, and I think it's particularly important that this step is being taken now because, in the current COVID-19 environment, tradies have got enough to worry about without wondering if they're actually going to get paid for their work.

The reality is that tradies, other subcontractors, security guards and contract cleaning employees are often owed money for long periods of time anyway. They should actually be getting paid sooner—and, of course, should actually be getting paid—rather than ripped off by phoenixing company directors. Now, phoenixing is a problem we're likely to see more of as, on this government's watch, we enter a recession, the first recession we've seen in Australia in nearly 30 years. Some experts are even linking an expected rise in phoenixing cases to exactly when federal government support is due to dry up in September when JobKeeper will end, the safe harbour laws will be removed, banking loans will be called in and the jobseeker additional payment will end. We face a fiscal cliff in September, when a range of support for businesses and individuals is due to dry up. That's exactly the time when we are likely to see more phoenixing activity by rogue directors who don't want to pay their bills, so putting this measure in place will go some way towards protecting people from being ripped off.

We're already, in fact, hearing reports of a number of businesses on the Gold Coast using coronavirus as an excuse not to pay their subcontractors. That is just not right and it's not fair, and that's why I and a number of other people on the Labor side of this parliament have been speaking up on behalf of those subcontractors for some time. I note that under the Queensland Minister for Housing and Public Works, Mick de Brenni, the Queensland government has taken significant steps to protect subcontractors and to make sure they get paid. We haven't seen enough action from this federal government up until now. There is much more to be done at the federal level but, credit where credit's due, I'm glad that they have eventually got around to introducing the director ID number that we've been calling for for a long time.

I will give just a couple of local examples. When a major Gold Coast based construction company, MJM Projects, folded in January it owed workers and subcontractors over $4 million, and they've been told they're not likely to see any of that money. On the Sunshine Coast, the latest high-profile building company collapse has left painters and plumbers trying to claw back massive bills—$150,000 in one case. This is money that they've been chasing for months anyway. Similarly, subbies and trade creditors were owed more than $3.6 million when another major builder, RiCon, entered administration in January. In the last month, we've seen more Queensland businesses come crashing down, including Bulkbuild, a building company which has worked on projects for some of Australia's leading organisations, which owes creditors about $1.6 million, most of it to subcontractors.

As I say, I've met in person with a number of subcontracting firms, often mum-and-dad businesses, that have been destroyed as a result of crooked corporate conduct, particularly phoenixing. I've met people who have literally lost their homes and lost their marriages because they've been left at the end of a queue, not protected by federal laws, when it comes to getting paid. So I certainly hope that the changes that are being introduced today—we've called for these changes to happen for a long time—will go some way to cracking down on those dodgy, illegal practices and protect hardworking people, who are not rich people, from being ripped off by larger, dishonest entities.

There is a lot more to be done at the federal level to tighten laws and enforce the laws that we do have to protect subcontractors from this kind of exploitation. I've asked about this issue in a number of estimates hearings, particularly with ASIC, and I have to say that I haven't been very impressed with the effort that they've put into this topic. I understand that they are a very stretched organisation and that there probably is an issue of resourcing that the government needs to look at. This is a massive problem. It amounts people being ripped off to the tune of billions of dollars over the course of a year, and ASIC has got to actually take this issue seriously and protect these smaller entities who are being ripped off far too often. There is more to do. We should be policing these issues more. We should be enforcing the laws more than we are. But, credit where credit is due. This proposal to introduce a director ID number is good, and that's why we will be supporting the bill.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

As a servant to the people of Queensland and Australia, I support the Commonwealth Registers Bill 2019 and the associated package of amending legislation, with reservations. Firstly, there is a growing belief among our governing class that, in many areas, Australian federalism relies on shared endeavour. I do acknowledge that coordinated federalism—where each government works with the other yet retains total determination over, and exercise of, its own constitutional powers—needs some honing today. After all, the internet runs as a thread through our society and connects us all across state borders. Yet this most definitely does not mean transfer of power from the states to the federal government. I'm advocating generally the reverse: we need to send some powers back from the federal government to the state governments in accordance with our Constitution.

It is fundamental to our Constitution and it is common sense that the best service delivery occurs when the person making a decision is located closest to the people affected by that decision. That is obvious. That is the reverse of what has happened in our country since 1944. The greater the distance apart, the worse is the decision-making. We need to stop centralising and restore competitive federalism. Competitive federalism, with six states working independently yet together, is highly effective. Our country was leading the world in per capita income from 1901, when we formed as a nation, until about the 1920s, and that was because of competitive federalism. I reiterate that it is very important to get back to competitive federalism with the states working independently yet together.

My second point is that I am concerned that this bill will give the states the chance to wash their hands of responsibility for the integrity of the data in this register. I urge the federal government to ensure that, when this register is designed, there is suitable, effective grievance reporting, so that where a person's entry contains an error or where a person has been mistaken for someone else, they can correct the record. Australians recently saw firsthand a total failure of the federal government's IT function with the chaotic, tragic robodebt scheme. And it's not just a matter of the government making an apology. It's not just a matter of there being an error of close to a billion dollars. It's a matter of wrecking people's lives. It's important to understand that the government never pays for its mistakes: the people do. What I mean by that is the people pay twice—once for what the government did through our taxation system and then through their own hip pockets for the consequences of the government's error. We can see that in relation to the ban on live cattle exports that the Gillard government capriciously put in place. We now see the federal government lining up to take over business registrations, and people know that outsourcing the IT function did not turn out so well for the government last time.

Thirdly, I am concerned that this bill is not about making a better system for controlling business registrations and keeping track of company directors. I am concerned that the government has spotted another chance to sling yet more taxpayers' money at one of their corporate backers. Who will it be? KPMG? Indue? We can hardly wait to find out, but we will be watching.

All parties to this register must show the respect that is required for the Australians whose livelihoods, whose legal liabilities, are bound to this register. Please, Minister, take your time and get it right. Remember our constitution and competitive federalism. Care about the people you are serving. The government must do better this time because after all government is here by permission of the people on behalf of the people to serve the people. That service from government must be in accordance with our people's governing document, our national Constitution.

Paul Scarr (Queensland, Liberal Party) Share this | Link to 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.

Jane Hume (Victoria, Liberal Party, Assistant Minister for Superannuation, Financial Services and Financial Technology) Share this | Link to this | Hansard source

Firstly, I would like to thank those senators who have contributed to this debate. Schedule 1 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 will provide the legislative flexibility for the government to modernise Australia's business registers onto a single platform to be administered by the Australian Business Register, within the Australian Taxation Office. Modernising the business registers will address registry fragmentation, improve business user experience, reduce risks of ongoing operating, foster data-driven innovation and enable better use of registry data.

The IT infrastructure underpinning Australia's business registry services has been found wanting and needs to be upgraded to meet current and future demands. To facilitate the implementation of a new registry system, a legislative package has been drafted that is flexible, technology-neutral and governance-neutral. The Modernising Business Registers legislative regime will allow a registrar, a Commonwealth body appointed by the minister, to create data standards and disclose frameworks to assist them in carrying out the registry functions and powers. The data standards will allow the registrar the flexibility to determine what information will be collected, how the information will be collected and the manner in which the information will be maintained. This flexible approach will ensure that the registrar can utilise the latest technology and practices.

Director identification numbers are being progressed as part of the Modernising Business Registers program. Schedule 2 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 provides for the introduction of a legal framework for director identification numbers which will require all directors, and alternate directors, of registered bodies to have a unique identifier. Administrative details, such as how to apply for a director identification number, will be determined by the registrar, or the registrars, appointed by the minister in due course. Importantly, once a director has been issued with a director identification number, that unique number will remain with them forever, meaning their directorships across companies and over time can be easily tracked. This will assist regulators and external administrators to investigate a director's involvement in what may be unlawful activity, including illegal phoenix activity, which has been a perennial problem for successive governments.

Director IDs are being progressed as part of the Modernising Business Registers program for two key reasons: First, doing so ensures that the director ID is integrated with other important registry data. This will provide greater insights to regulators, to businesses and to individuals on the identity and affiliations of directors. Having all business registry data linked will help with risk profiling and to combat illegal phoenixing. Second, ASIC's registers are ageing and outdated. Adding large amounts of functionality to registers that will soon be replaced will be very costly, likely increase the instability of ASIC's systems and also offer limited anti-illegal-phoenixing benefits. Moreover, ASIC does not have an identity verification progress. Progressing director IDs as part of the Modernising Business Registers program will also allow Director IDs to use the most advanced identity verification processes.

The Modernising Business Registers program will be delivered iteratively over a number of years. However, director IDs will be one of the earliest deliverables on the new, modernised platform. The government will closely monitor the effectiveness and progress of the entire program on an ongoing basis. I commend this bill to the Senate.

Question agreed to.

Bills read a second time.