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Tuesday, 12 September 2017
Page: 10155

Mrs SUDMALIS (Gilmore) (17:32): We work so hard in this place to make things better for our constituents. Sometimes this is a change in vaccination subsidy, like the shingles for free vaccine for 70 to 80-year-olds, or the reinstatement of the pensioner concession card to those 92,300 self-funded retirees who lost it in January this year—both being measures for which I was an effective advocate for change. But some of our advocacy is long-term and needs solid and definite policy change, not tinkering around the edges. I've been working for some constituents on issues that relate to the actions of ASIC, the ACCC, the ATO and bank behaviour—or, in some cases, their non-action. It is hard for me to understand when I take a significant case to ASIC and then to the ACCC and both organisations carefully reply that there is little they can do, yet when the case is given to the Australian Small Business and Family Enterprise Ombudsman, there is actually a case to answer. I totally commend my government for bringing the small business ombudsman into existence for this particular four-year-old case, otherwise it would never have been proper reviewed.

In addition, another important step in the process, as announced today by the Turnbull government, is taking action to crack down on illegal phoenixing activity, which costs the economy up to $3.2 billion per year, to ensure that those involved face tougher penalties. I could not have been more pleased to see the media release from the Minister for Revenue and Financial Services, the Honourable Kelly O'Dwyer MP. Phoenixing is the stripping and transferring of assets from one company to another by individuals or entities to avoid paying liabilities. It's been a problem for successive governments over many decades. At this stage, I cannot name the case I mentioned earlier, but Mark N. would be thrilled to see this antiphoenixing initiative. It has been a long wait indeed.

Phoenixing hurts all Australians, including employees, creditors, competing businesses, subcontractors in the construction industry and taxpayers. The government's comprehensive package of reforms will include the introduction of a director identification number, colloquially called the 'DIN', and a range of other measures to deter and penalise phoenix activity. The DIN will identify directors with a unique number, but it will be more than just a number; it will be connected to other government agencies and databases to allow regulators to map the relationships between individuals and entities and between individuals and other people, unlike the current situation where different levels of bureaucracy and departments allow clouding and difficult investigation pathways to take place.

In addition to the DIN, the government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers. The measures will include: specific phoenixing offences to better help regulators take decisive action against those who engage in this illegal activity; the establishment of a dedicated phoenix hotline to provide the public with a single point of contact to report illegal phoenix activity; the extension of the penalties that apply to those who promote tax avoidance schemes, to capture advisers who are phoenix operators; stronger powers for the ATO to recover security deposits, preventing directors from backdating their resignations to avoid personal liability or from resigning and leaving a company with no directors; and prohibiting entities of the phoenix operator from appointing a liquidator, because this is one of the methods where goods and property are transferred from one company to another with little or no cost implications, and the creditors lose out.

I say it's about time the government consults on how best to identify high-risk individuals who will be subject to new preventative and early intervention tools, including a better process of appointing the liquidators. I hope this applies to the administrators, as well as allowing the ATO to commence immediate recovery action following the issuance of a director penalty notice. These reforms complement and build on other government action to combat crime and fraud in the economy. These include: instituting the Phoenix, Black Economy and Serious Financial Crime Taskforces; strengthening disciplinary rules for insolvency practitioners; legislating to improve information sharing between key regulatory agencies; reviewing and enhancing ASIC's powers and enforcement tools; consulting on law reform initiatives to curb the excessive drain on the taxpayer funded Fair Entitlements Guarantee scheme, which covers employees' entitlements left outstanding as a result of failed business enterprises—businesses that are phoenixing should take the penalty; and consulting on a register of beneficial ownership of companies to be made available to key regulators for enforcement purposes. It is excellent to see this commitment from my government to making sure that individuals who engage in illegal phoenixing activity are held to account, and that the regulators are equipped to take stronger action to both deter and penalise phoenixing activity.

In addition, I believe we must start to introduce more effective constraints for businesses and their relationships with their banks. The study being done by Kate Carnell in her role as the Small Business and Family Enterprise Ombudsman is an examination of bank behaviour in relation to small and medium businesses. This is, I believe, a model that can be used with the same kind of vigour to investigate what can only be described as unconscionable conduct by banks in their pursuit of ever-increasing shareholder profits, and, in addition, their remuneration bonus structures of reward. The Treasurer is in the process of reviewing this, and recent legislation suggests we have made an excellent start.

We appear to be failing in our duty to the everyday Australian by not forcing accountability and behavioural change in our financial institutions. I welcome the continuing rollout of legislation, review and consultation. There are families and businesses with case studies that are so compelling that we must continue to review the process with the vigour that we demonstrate right now. There's a great need to address what has occurred historically and give recompense where deserved. Even more importantly, there's an urgent need to put in place regulations that prevent such conduct in these associated industries in the future. It is time to gather the recommendations of previous investigations and inquiries done in this House, review them, and determine a legislative timetable to bring forward the very essential changes that are needed and have been recommended.

I've read enough, heard enough and seen enough material from the committee investigations to convince me that what I say is a true reflection of many committee inquiries. As a responsible government, we must continue this process with an expectation of regulatory and legislative change with an appropriate schedule to introduce such changes. There is no code of behaviour for banks to stop them assisting customers applying for credit cards. There does not appear to be an audit of the debt levels for individuals who apply for one credit card after another. But I bet if they defaulted on a payment there'd be a rapid review of their credit status history, and they would quickly be taken to court for financial settlement or have their assets sold off to pay off their debts. We have a problem when businesses incur a debt with the ATO and are not in a position to pay off their ATO debt. There's a prohibitive interest rate applied to their debt levels which makes many businesses become bankrupt. And then we have employees without jobs. Shame on our system for not having a checking system in place—which makes this an important part of policy development in our immediate future. Shame on those in the credit-card industry for not acting with financial responsibility.

I am proud to stand here today to acknowledge the steps that are being put in place, but I recognise there is a great deal more to do. We must encourage a cultural shift in our regulatory boards—ASIC, APRA, the ACCC and the ATO. Their actions, or lack of them, have profound and far-reaching effects on many levels of the Australian economy, both the fiscal economy and also our social economy.