CRACKING DOWN ON ILLEGAL PHOENIX ACTIVITY
Federation Chamber, 20 June 2018
In May 2017 Labor announced that a Shorten Labor government would take significant action to tackle illegal phoenix activity. We said, in particular, that we would put in place a director identification number, dealing with the problem that, right now, it is tougher to open a bank account than to register as a company director. One of the consequences of this was brought home through media reports which noted that a member of this House was registered multiple times as a director. That, I assume, was inadvertent, but the fact that it could occur at all illustrates the problem in our current system.
The government eventually—as in other issues I've highlighted—said that it would do the right thing; it said that it would put in place a director identification number. But while it said that belatedly in September of last year, it's been nearly a year now and we're yet to see real action. Indeed, the government hasn't even clarified whether their commitment to a director identification number requires a 100-point ID check, which is a fundamental aspect of the policy announced by Labor in May 2017. Extraordinarily, Minister Kelly O'Dwyer has even suggested that a director identification number might be based on the use of biometric data.
The government is clearly failing to do its homework and while it keeps on missing deadlines to tackle illegal phoenix activities, we see more and more damage being done to honest businesses, to workers and to taxpayers. How much does this cost? It's an interesting question to ask, because the Turnbull Government currently uses figures from six years ago about the cost of dodgy directors. They’re using an estimate from 2012 which put the cost of phoenix activity at $3 billion a year. In 2015, the government received updated costs from PwC about the cost of illegal phoenix activities. We've attempted to get that information in the public domain through freedom of information requests, but the freedom of information emails reveal correspondence saying the draft report—a 2015 report—'is not yet finalised and won't be ready to be published in the near future'. It is extraordinary that the government still fails to release information on the cost of illegal phoenix activity.
Let's remember who supports a director identification number. The Australian Labor Party, of course, as well as: the Australian Institute of Company Directors; the Australian Small Business and Family Enterprise Ombudsman; the Productivity Commission; the Tax Justice Network; the Australian Chamber of Commerce and Industry; Master Builders Australia; the Australian Council of Trade Unions; the Australian Restructuring Insolvency and Turnaround Association; the phoenix project, comprising experts from the University of Melbourne Law School and Monash University Business School; and the Australian Institute of Credit Management.
Australians need action—not announcements—on dodgy phoenix activity. I ask the minister whether or not Treasury has in fact drafted legislation to implement the director identification number, and, if they have, when are we going to see the exposure draft legislation to introduce the director identification number? Additional to that, when are we going to see estimates of the cost of illegal phoenix activity to the Australian economy? Is that report close to release? When will it be released?
We know that the vast majority of Australian businesses are honest businesses who hate nothing more than being burned when someone they're doing business with trashes the company, takes the assets out and deliberately puts the firm into liquidation, leaving employees, taxpayers, creditors and other businesses in the lurch.
If this government were serious about cracking down on dodgy directors, we'd have exposure draft legislation tomorrow. This is a government that can get very tough with welfare recipients very quickly but it is as slow as a wet week when it comes to dealing with dodgy phoenix directors. The government needs to get with Labor, which said in May last year we would act on dodgy phoenix directors. It's nearly a year since the government said it would follow suit.
Authorised by Noah Carroll ALP Canberra