THURSDAY, 7 MARCH 2019
SUBJECTS: Labor’s plans to crack down on dodgy directors; Australia’s per-capita recession; Labor’s plans to close tax loopholes.
JON FAINE: Andrew Leigh is the Assistant Treasurer from the Federal Opposition and he thinks he has found a formula for dealing with this. Mr Leigh good morning to you.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Jon, great to be with you.
FAINE: I first reported on this 25 years ago when I was working on ABC TV's The Investigators, no one has been able to crack this nut for the decade since, what do you think you can do about it now?
LEIGH: Phoenixing is a bit like tax avoidance: you've got to constantly be updating the laws to keep up with the wrongdoers. But we've put together a pretty comprehensive plan: a Tradie Pay Guarantee with so-called ‘cascading trusts’ which ensure that on big Commonwealth projects people who do the work on time, get paid on time. We'll beef up the funding to ASIC to run cases going after dodgy phoenix directors, not only to catch them but send an example to the rest of the industry.
FAINE: ASIC has been extraordinarily incapable of doing anything about it for decades, why do you think suddenly now they can?
LEIGH: ASIC has had funding pressure, and some of the ASIC cases have been important. They ran a case ASIC v Somerville in 2009 against a lawyer who was abetting phoenixing schemes. They not only got their guy but then they used that example in their roadshows as a shot across the bow to anyone else who might think of putting together phoenixing scams.
FAINE: Yeah, but it hasn't put an end to it, has it?
LEIGH: It hasn't completely eliminated it which is obviously what we'd like to do.
FAINE: Until you get phoenixing directors being taken away in hand cuffs and on the news at night, the message really won't get through will it?
LEIGH: We need to make sure we crack down on dodgy directors. We've said we believe there ought to be a power to name and shame dodgy directors and we need a director identification number, Jon. One of the problems right now is that it's harder to open a bank account than it is to become a company director. One expert said they thought the laws were so lax you could almost register your dog as a company director.
FAINE: Well that has been done in the past in fact.
LEIGH: Indeed, indeed. Director Fido is a bit of an issue and it's why Brendan O'Connor and I said in 2017 we thought there should be a Director Identification Number. But the Government has basically downed tools on that. They say they've committed to it but the legislation is languishing and we haven't got the action on that we believe we need.
FAINE: In order to take that action, you would be effectively saying that you're making life more difficult for the business community, they've just had a major conference organised by the Financial Review in Sydney and the main message that has come out of it is business telling government to make life easier for them rather than more difficult?
LEIGH: Not on a Director Identification Number, Jon. It's supported by the Australian Institute of Company Directors and the ACTU. It's supported by the Australian Restructuring, Insolvency and Turnaround Association. It’s supported by groups across the political spectrum. Good directors want a Director Identification Number because they see the damage that dodgy directors do. And then we've announced today that in the building sector we'll work with states and territories to make sure that if you've been caught phoenixing, your building licence is cancelled as well. You're right, trust hurts the mental well-being of builders, it's a real cancer on the industry. The cost has been estimated at $5 billion a year, most of that falling on subbies. Labor wants to make sure that we tackle that problem of late payment because we're in this situation right now Jon where incomes are stagnating and they're going to get worse if you're a subbie and you're not paid on time.
FAINE: Today's Financial Review front page headline reads "Business warns Labor wage plan won't lift living standards". It goes on to quote several leading figures from the Australian business community at their big conference for the last few days saying that creating jobs and wealth and boosting productivity will not be achieved by Labor stepping into the 19th century says the Boral Chief Executive, Mike Kane.
LEIGH: I'm not in favour of bringing back wigs or candle lighting, but I do think there is something to be said for raising wages. I'm not alone in that, the Reserve Bank Governor thinks that and as do leading institutions around the world. Daft businesses can think that they can have badly-paid workers and well-paid customers. Smart businesses recognise their workers and their customers are the same people. We have got to get wages going again in this country, Jon. It's a central challenge to our living standards, the reason retail sales are in the doldrums and why new car sales are falling off a cliff. If we don't have solid wage growth, that undermines our sense of shared prosperity, it drives anxiety and populism, it seeds insecurity-
FAINE: So I'm reading between the lines, this conference on the last two days, business leader after business leader, Mr Kane has a long history of being very unhappy with the Labor Party and very antagonistic to industrial campaigns of any kind. But he on behalf of and with many other business leaders are basically saying that they do not think that you and your party are going to provide them, the business community with the polices they need to try and improve the Australian economy.
LEIGH: Well here's what we'll do to get growth going again, Jon. We'll provide exactly the same corporate tax rates plus an Australian Investment Guarantee. We'll provide leadership certainty and we'll provide an energy policy - which has been sadly lacking under the current mob. We'll invest in education and in infrastructure which are the foundation stones of good economic growth. We've got a very strong growth plan which is far in advance of anything that the Liberals might put up in their desperate attempts to hold onto Government.
FAINE: How many fire fights do you want to have on one front? You've got your excess franking credit fight, you've got your negative gearing fight, now you've got a living wage fight that Bill Shorten repeated his commitment to the other day so how many fires on how many fronts do you think you can manage at one time?
LEIGH: Jon I'm a lover not a fighter by temperament. I think we ought to be focusing on inclusive growth. The policies we have aren’t just good for reducing inequality, they’re also good for boosting growth. If you think about our plan to extend early childhood to three year olds-
FAINE: Sorry, early childhood education I think was what you meant.
LEIGH: Yes, I'm sorry.
FAINE: I don't think we're looking at extending early childhood, we're looking at early childhood education?
LEIGH: You're quite right to pull me up. So right now the Government won't even guarantee preschool funding for four year olds. We'll not only do that, we will extend it to three year olds. That ensures those in disadvantaged circumstances have a great start in life but it also ensures that we narrow down the performance gap that we see now, three years between advantaged and disadvantaged communities. That's one of our pro-growth policies as well as a strong equity policy. We uncap university places, 200,000 more kids attend university and we've not only improved equity but we've put them in a position where they're ready to join the workforce of the future - again boosting growth.
FAINE: Sure but the economy is not a magic pudding, you can't keep dipping into it and expect it to constantly just provide, at some point we need to pay for those initiatives don't we and that's where the tax increase comes in.
LEIGH: That's absolutely right. So that's why we've been very clear with the Australian people as to the tax loopholes we would close and very clear about the importance of cracking down on tax havens and multinational profit shifting. We've got a huge amount of profits now being routed through tax havens like the Caymans and the Bahamas and yet a Government that is unwilling to properly crack down on tax havens. You know right now, Jon, you can claim a tax deduction for flying to a tax haven to check on your investments?
FAINE: Oh that's good I must book my flight, thank you that's a great one. I'm really glad you brought our attention to it. We'll have to leave it there, the news waits for no one. Thank you for your time, Andrew Leigh the Assistant Treasurer from the Federal Opposition.
LEIGH: Thanks Jon.
Authorised by Noah Carroll ALP Canberra.