HOUSE OF REPRESENTATIVES
THURSDAY, 14 SEPTEMBER 2017
Five years ago, Daniel O'Connell took on a contract to do some plumbing work in a caravan park in regional Victoria. Daniel was commissioned to do the work by a firm called Global Contracting, which eventually admitted that it wasn't going to pay him. He was left $200,000 out of pocket, one of around 300 contractors that lost a collective $8 million when the people who ran Global Contracting shifted money into other firms.
Phoenixing activity costs the Australian economy as much as $3 billion a year. In Northern Tasmania, a franchisee who ran multiple Noodle Box franchises was charged with alleged phoenix activity for having reportedly reassigned a number of the Noodle Box store leases, plant and equipment in such a way as to deny the creditors access to what was rightfully theirs. The scourge of phoenix activities hurts taxpayers, workers and honest businesses.
On 24 May, the member for Gorton, Senator Gallagher and I announced Labor's plan to crack down on dodgy directors. We pointed out that it was easier to become a company director than to open a bank account.
We proposed a series of measures, costed by the Parliamentary Budget Office. They included requiring all company directors to obtain a unique director identification number with a 100-point identification check; increasing the penalties associated with phoenix activity; introducing an objective test for transactions depriving employees of their entitlements; and clarifying the compensation orders against accessories.
We noted the number of organisations which had supported Labor's policy. Within a matter of weeks, the Productivity Commission, the Australian Institute of Company Directors, the Australian Small Business and Family Enterprise Ombudsman, the Australian Chamber of Commerce and Industry, Master Builders Australia, the Australian Council of Trade Unions, the Australian Restructuring Insolvency and Turnaround Association and the Tax Justice Network were among those calling on the government to adopt Labor's proposal of a director identification number.
As the Commissioner of Taxation, Chris Jordan, told Senate estimates:
This is not a new issue. Phoenixing is a big problem, especially when you have these people that are unassociated with the principals. You cannot keep track.
Mr Jordan told one senator:
I could appoint you as a company director without you even knowing, with me then controlling the company.
One expert said, 'You can almost literally register your dog as a company director.'
It has been four months since Labor put out these detailed costing plans to crack down on phoenixing. This week, from the government, we got an announceable that they would be moving towards a director identification number. But you'd look in vain for the details. It's a headline with no costing behind it. Unlike Labor, who are precise as to how we would crack down on phoenixing activity, the Minister for Revenue and Financial Services was on Jon Faine this week, saying, 'Well, maybe you'd do it through biometrics.' It's possible you could set up a biometric database for every director in Australia, but you might want to cost that beforehand.
The fact is that even when you think the coalition are adopting good Labor policy, they muck it up. Frankly, what would you expect from a minister who recently claimed credit for a $340 million judgement against Chevron for violating multinational tax laws, despite having voted back in 2012 against the very laws that took $340 million from Chevron.
After question time today, the member for Fadden made a personal explanation relating to some reports in Fairfax this morning. He mentioned at the end a letter that I had written to ASIC Commissioner Greg Medcraft. Let me be clear. My only focus in the particular issues relating to the member for Fadden was to ask the simple question: is ASIC investigating the allegations raised by Fairfax? I then raised three policy questions relating to the consent required to be appointed a director, to director registration and to the penalties associated with this.
The particular affairs of members of this House are not what concern me—indeed, my thoughts are with the family of the member for Fadden—but this is not the first time we've seen allegations raised in the press about Liberal Party members and their roles as directors. The opposition's concern is to get the policy right.
The government must crack down on dodgy phoenixing.