‘YOU CAN ALMOST REGISTER YOUR DOG AS A COMPANY DIRECTOR’
Australian Tax Office Commissioner Chris Jordan this morning has confirmed the need for action on dodgy phoenix operators, who deliberately burn companies in an attempt to avoid their obligations to employees, taxpayers and honest businesses.
The Tax Commissioner told a Senate Estimates Committee:
“This is not a new issue. Phoenixing is a big problem, especially when you have these people that are unassociated with the principals. You can’t keep track.”
When speaking on how easy it is to become a company director in Australia, Mr Jordan told one Senator:
“I could appoint you as a company director without you even knowing and me then controlling the company”
The Tax Commissioner also noted that in other countries, proper identification checks are required for anyone wanting to become a director.
Illegal phoenix activity costs our economy billions of dollars annually. That’s why Labor last week announced measures to crack down on dodgy directors:
- Requiring all company directors to obtain a unique Director Identification Number with a 100-point identification check.
- Increasing penalties associated with phoenix activity
- Introducing an objective test for transactions depriving employees of their entitlements
- Clarifying the availability of compensation orders against accessories
- Consulting on targeted integrity measures based on the recommendations of the Melbourne Law School / Monash Business School Phoenix Research Team recommendations.
Malcolm Turnbull is captive to the far right of his party on climate policy - Transcript, Sky AM Agenda
SKY AM AGENDA
MONDAY, 29 MAY 2017
Subject/s: Paris Climate Accord; Climate Policy; Healthcare Funding.
KIERAN GILBERT: With me now is Labor frontbencher, Andrew Leigh. There has been a lot of speculation around Donald Trump, he's apparently told people close to him that the US will indeed pull out of the Paris Climate Accord as expected. The Government are pushing ahead with its targets on a broad policy sense you'd welcome although you'd disagree with the mechanism by which they want to get there?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Well, Kieran the Government has no plans beyond 2020 and it's rejecting an Emissions Intensity Scheme which every expert supports. State Governments, the Business Council of Australia, the National Farmers Federation support an Emissions Intensity Scheme. It’s supported by the Australian Energy Markets Commission, by Prime Minister Turnbull's former energy adviser, the CSIRO, the Chief Scientist and of course Labor. So by putting their head in the sand on an Emissions Intensity Scheme the Turnbull Government are overseeing not only rising electricity sector emissions but also fast rising energy prices. We're paying more for electricity and having higher climate emissions as a result of Malcolm Turnbull still being captive to the far right of his party.Read more
WEDNESDAY, 24 MAY 2017
Subjects: Labor’s plans to tackle phoenixing activity, ATO arrests, charities and transparency
JEREMY CORDEAUX: Phoenixing – it’s a lovely word, isn’t it? Phoenixing, phoenixing, phoenixing. Phoenixing companies. I was talking about it at the beginning of the program – it’s about stripping the assets of a company, going bankrupt, scamming all the creditors – including the ATO – then starting up the company again, down the road maybe or maybe in the same place, I don’t know, and doing it all over again. It’s just too easy and too attractive and it shouldn’t, somebody should’ve done something about this a long time ago.
Somebody who feels very strongly about it is Dr Andrew Leigh. He’s the Shadow Assistant Treasurer and he’s got a whole pile of other things he’s responsible for. I personally think he should be the leader of the opposition, but that’s just me. How are you, Dr?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Very well, though I have to disagree of course Jeremy – I think Bill is doing a fantastic job as our leader.
CORDEAUX: Well, you would say that. I just think you can run rings around just about everybody in parliament, frankly, but anyway.
LEIGH: Very kind of you.
CORDEAUX: That’s just me. Now, this phoenixing thing – how come this has been allowed for so long?
LEIGH: Well, beats me. I mean, phoenix operators are ripping off taxpayers, ripping off workers and most of all they’re ripping off decent small business owners. There was a bloke called Daniel O’Connell, a plumber in regional Victoria who lost $200,000 to a phoenix operator called Global Contracting, who left him and another 300 creditors out of pocket when they took the money and moved it to a different company.
There’s a team of experts at Melbourne University and Monash who have been working on phoenix policy for the last three years and have come up with a bunch of sensible recommendations, including the straightforward idea that we should have a director identification number, so directors can’t pretend to be a different person when they get shut down and then want to go back into business.
CORDEAUX: No, I couldn’t agree more. It’s such a simple way of handing it. If you’re the director of a company - and it’s very easy to set up a company and it’s very easy to become a director – it should be that there is some sort of accountability or tracking mechanism.
LEIGH: And the strange thing, Jeremy, is that it’s easier at the moment to become a director than to open a bank account. We’ve had praise for our proposal today coming not only from the ACTU, but also from former ACT Liberal leader Kate Carnell. We’ve had the Australian Institute of Company Directors saying that they support a director identification number.
CORDEAUX: What do the Liberals say?
LEIGH: Well, they say they’re looking into it, but they’ve been dragging their heels on this one and meanwhile honest businesses are getting ripped off. Phoenix operators are able to run rampant in the economy, particularly in areas like construction and labour hire and they’re giving good directors a bad name and they’re ripping off honest workers.
CORDEAUX: The areas that sort of get feedback on are car, people in the car business, the car industry, the cleaning contractors, the building industry is almost infamous for this type of thing.
LEIGH: That’s right. We all know the myth of a phoenix, a bird that’s magically reborn from its ashes. But there’s nothing magical about these phoenix operators. They’re the lowest of the low because they they’re taking advantage of people’s trust and then leaving others out of pocket to pick up the pieces. Trying to take the assets, strip them out of one company and put them in the next one. We might not be able to eliminate all phoenixing, but straightforward measures such as raising the penalties, getting the standard of proof right and getting the director identification number will make a big difference.
CORDEAUX: Yes, that should just whiz though, for god’s sake. Everybody should be favour of that unless you’re a crook.
LEIGH: I certainly hope it will. We’re encouraging the government to take this up and frankly the thing about politics Jeremy is that we don’t mind who takes the credit, so long as the change gets done. So long as we can get this important change in place and protect people like Daniel O’Connell.Read more
HuffPost, 25 May 2017
If you have to blame anyone, blame Napoleon.
In response to the young French general’s early military successes, Britain in 1798 imposed the world’s first progressive income tax, with rates ranging from 1 percent to 10 percent. To save the English from having to speak French, Prime Minister William Pitt the Younger decided that the rich shouldn’t just pay more money, but actually pay a higher rate.
Today, there are a handful of countries that levy flat income taxes. In Russia, for example, all income taxpayers pay 13 per cent. But in most nations, taxes are progressive, meaning that the more you earn, the higher rate you pay. When the Beatles sang ‘Taxman’, they were complaining about the fact that their success had pushed them into the top tax bracket, where they paid a marginal rate of 95 per cent.
Unfortunately, when it comes to discussing Turnbull Government’s Medicare Levy increase, a surprising number of political commentators today seem to be confusing flat and progressive taxes.
Liberal Senator Scott Ryan thundered 'The top tax bracket - $180,000 and above – seven per cent of all income earners or just under, they’ll pay 27 per cent of the increase in the Medicare levy so it is highly progressive.'
Commentator Mungo MacCallum observed 'raising the Medicare levy, which in fact means an overall tax increase, is sensible policy, and, crucially it is fair.It is not a flat-rate, across-the-board, slug'.
An editorial in The Australian claimed 'Scott Morrison proposed lifting the Medicare levy from 2 per cent to 2.5 per cent from 2019 to meet the NDIS shortfall identified by the government. However unwelcome for taxpayers, that strategy at least affirmed “we are all in this together”. The levy is a progressive tax.'
All of them are wrong. When you ask a hairdresser and a surgeon to each pay 0.5 percent of their income, that’s a flat tax.Read more
WHO SUPPORTS LABOR’S PLAN FOR A DIRECTOR IDENTIFICATION NUMBER,
TO CRACK DOWN ON PHOENIX COMPANIES?
Organisations that support Labor’s proposed Director Identification Number, to help catch dodgy directors of fraudulent phoenix companies:
- Australian Institute of Company Directors
- Australian Small Business and Family Enterprise Ombudsman
- Productivity Commission
- Australian Chamber of Commerce and Industry
- Master Builders Australia
- Australian Council of Trade Unions
- Australian Restructuring Insolvency and Turnaround Association
- Phoenix Project, comprising experts from Melbourne University Law School and Monash University Business School
Groups that have not yet indicated their support for a Director Identification Number:
- The Turnbull Government
THURSDAY, 25 MAY 2017
PARLIAMENT HOUSE, CANBERRA
WEDNESDAY, 24 MAY 2017
SUBJECT/S: Labor’s policy to crack down on dodgy directors; regulation of labour hire.
BRENDAN O'CONNOR, SHADOW MINISTER FOR EMPLOYMENT: I'm here with the Shadow Assistant Treasurer, Andrew Leigh and we're announcing a Labor policy to crackdown on abuse by directors and the real problems associated with phoenixing in this country. There has been too little done by the Turnbull Government to crackdown on misconduct by directors who seek to strip away assets from a company to avoid their obligations to pay creditors, in particular to pay workers who deserve those entitlements. And for that reason, Labor is announcing a suite of reforms that will provide greater accountability and transparency of directors, higher penalties if there are breaches and indeed a better way of ensuring that workers’ entitlements are paid to them.Read more
EXPOSING DODGY DIRECTORS
Today, Labor has announced a Shorten Labor Government will act to protect employees and small businesses from dodgy phoenix activity through a package of reforms.
Labor will crack down on dodgy directors who engage in ‘phoenix activity’, where they deliberately burn companies in an attempt to avoid their obligations to employees, government and honest businesses.
The package will see employees and business owners benefit from new enforcement tools for the Australian Securities and Investments Commission, tightened laws protecting employee entitlements, and harsher penalties to deter and punish insidious phoenix activity.Read more
CANBERRA DESERVES BETTER
Inside Canberra, 19 May 2017
Canberra got a dud deal from the Coalition’s 2017 budget. In at least five significant ways, the bush capital will be left worse off as a result of deliberate decisions by the Turnbull Government.
First, one of Canberra’s largest export earners is education, with university teaching and research vital to sustaining the ACT economy. Cutting $2.7 billion from universities in addition to the 2.5 per cent efficiency dividend and lowering the repayment threshold for HELP loans will hold back important institutions like the University of Canberra, the Australian National University, ACU (Canberra) and UNSW (Canberra).
Second, the Turnbull Government’s own budget papers show that they are ripping $22 billion from schools. ACT schools are the hardest hit in the country. Annual average growth rate in per student funding is only 1.6 per cent for the ACT over the decade, compared with 4.1 per cent growth for Australia as a whole. Tanya Plibersek, our Shadow Education Minister, has pledged that a Labor Government will reverse every single cent of the $22 billion cut. We won’t be giving a $65 billion handout to big business. Instead, we will be investing in our nation’s schools.Read more
FRIDAY, 19 MAY 2017
SUBJECT/S: ATO tax fraud case, federal corruption commission, Labor’s tax haven transparency package, whistleblower protections, Labor’s budget reply.
SABRA LANE, PRESENTER: The Government in last week's Budget revealed that is was pushing ahead with stronger anti-tax avoidance measures to try and ensure multinational companies pay their fair share of tax here. It's banking on the Australian Tax Office collecting more than $4 billion extra as a result during the next financial year. Labor this morning is proposing other measures like forcing companies to declare where they pay tax, and greater incentives for whistleblowers.
Joining me now to discuss it is the Shadow Assistant Treasurer, Andrew Leigh, from our Sydney studio. Mr Leigh, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Sabra, great to be with you.
LANE: We'll discuss your ideas in a moment. First, there's a lot of attention on the ATO right now given the arrests over an alleged $165 million fraud case. There are some concerns that this might actually jeopardise another investigation into the Panama Papers. Do you share those concerns?
LEIGH: That's certainly my first concern. It is obviously good that the Tax Office's systems flagged this issue up, but it is an incredibly serious challenge. Obviously I don't want to go to any of the specifics of the individual who has now been charged, but Labor is concerned that those ongoing multinational tax investigations continue to take place. We do believe that this reinforces the need for the Senate investigation into a national integrity commission which we have been calling for quite some time now.Read more
A Few Big Firms*
Andrew Leigh and Adam Triggs
The Monthly, 17 May 2017
A few years ago, a pair of young economists noticed something odd in the Australian petrol market. Melbourne University’s David Byrne and Sydney University’s Nicolas de Roos saw that petrol retailers were suddenly coordinating their prices much more precisely than ever before. Relative to the price of crude oil, motorists were paying more at the bowser.Read more