Too little, too late on phoenixing - Transcript, The Business

E&OE TRANSCRIPT

TELEVISION INTERVIEW

ABC THE BUSINESS

TUESDAY, 12 SEPTEMBER 2017

SUBJECTS: The Turnbull Government adopting Labor’s plans to tackle dodgy directors, power prices and a clean energy target.

ELYSSE MORGAN: Andrew Leigh, you've been pushing for a crackdown on businesses phoenixing. You must be pleased with the Turnbull Government’s announcement today?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Well, I am pleased that they’re finally acting, Elysse. But it’s taken a long time. Brendan O’Connor, Katy Gallagher and I announced Labor’s policy on tackling dodgy phoenix directors back in May – four months ago – based off the recommendations of Monash and Melbourne Universities’ studies on this. Since then, we’ve had the Australian Institute of Company Directors, the ACTU and a host of expert bodies come on board and call for the Turnbull Government to act. But all the Government has said on the director identification number is still at the announceable stage. We had the Minister today talking about maybe doing biometric checks – clearly they haven’t though this through very well. And they still haven’t adopted Labor’s policies of ramping up the penalties and improving the test for depriving employees of their entitlements.

MORGAN: Just to break it down a bit, the Government has adopted the recommendation that every company director should have an identification number. But we don’t know yet if that will include a 100 point identity check. Any reason do you think why they haven’t gone down that path?

LEIGH: I think they’ve just been sitting on their hands, frankly. This has been a recommendation that’s been absolutely clear from a range of expert bodies. The 100 point ID check is in place, it’s how we check people’s identity when they open a bank account and using a 100 point ID check here would ensure that it is as tough to become a company director as it is to open a bank account.

MORGAN: If Labor was to come in, obviously you would adopt it, but would you adopt it to be retrospective as well so that all directors would have to go back and get a licence number?

LEIGH: Yes. Ultimately you would need all directors to come under the system, just as any licencing regime demands. This is about protecting honest businesses. The tax office did 1000 audits last year looking into phoenixing activity, which is estimated to cost the economy anywhere from $2 to $3 billion a year. We’ve had these terrible stories, such as one from Tasmania of a dodgy company that moved its plant, its equipment, its leases to another firm then shut down the existing firm and deprived the creditors of what was rightfully theirs. Phoenix activity hurts workers, tax payers and honest businesses – that’s why we’ve got to get on and stamp it out right now.

MORGAN: You mentioned specific rules around phoenixing offences and the Government says that they’re looking to introduce specific phoenix offence rules, but experts in this field are concerned that they will get in the way of legitimate business rescue. How can it be assured that that doesn’t happen?

LEIGH: We need to ramp up the penalties for wrongdoing. I think at the moment the penalties are too low. We need the right test, if you’re depriving employees of their entitlements. The test that currently exists is so stringent that it’s barely even applied to any firms. We need to make sure that if directors do the wrong thing, then the law comes down on them like a tonne of bricks. That‘s so honest directors – the vast majority of directors out there – can get on with running their decent businesses without worrying about being ripped off by the shonks and the sharks.

MORGAN: Quick question on the biggest story of the day – AGL and the Liddell power station. It’s closing and it will leave around a 1GW hole in the system by 2020. If Labor was in power, what would you be doing to help fill that hole?

LEIGH: We need to make sure we’ve got more gas, more renewables, more batteries. We’ve seen under the Turnbull Government Sydney electricity prices going up by about $1000 a household and we’ve seen the closure of a number of coal fired power stations taking 4000MW out of the system. So, we’ve got to have a clean energy target that provided certainty for investment and a national interest test for new gas developments, which ensures that we’re getting gas provided to the domestic market, not merely being shipped off shore.

MORGAN: And so does that mean there will be further subsidies to encourage clean energy?

LEIGH: What we need is to get the relative prices right. This is why Malcolm Turnbull crossed the floor to vote with Labor for the emissions trading scheme back in 2010. It’s why every serious economist believes you need a market-based mechanism to tackle climate change. The Chief Scientist’s report, the Finkel Report, says you need a clean energy target. Labor’s been constructive in working with the Government, but we know – as every serious expert knows – that you’ve got to get the prices right. Emissions trading is operating in China now, a nominally Communist economy, and yet the nominally free market Liberal and National parties are still clinging onto this idea that the solution to Australia’s energy challenge is to keep a 50 year-old coal plant going for 60 years.

MORGAN: Andrew Leigh, thank you so much for joining the program.

LEIGH: Thanks, Elysse. 

ENDS


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