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Wednesday, 29 February 2012
Page: 2362


Mr RIPOLL (Oxley) (18:17): It is a pleasure to talk on the Corporations Amendment (Phoenixing and Other Measures) Bill 2012. This is a good bill, which is probably overdue in a lot of areas. I understand the anxiety of a number of coalition members—I would be anxious too if I had been in government for 12 years and done nothing about it. It takes a Labor government to come in and start doing the good work that is required, to start taking an interest for the first time in what has been acknowledged as a problem in the business community for many years.

It is a difficult issue: phoenixing takes many different forms. Some people might be listening to this and think that phoenixing does not sound that abhorrent, but it actually is; it is very bad for a lot of people. It is bad for the people who work for those companies, for the people who miss out on their entitlements or in some other way lose their job. It is also bad for the consumers or suppliers or any people related to the business that is shut down and then restarted in another form elsewhere. So it is important that we actually do something about this and that we make some changes to account for what has been an ongoing problem for many years.

I want to thank the Parliamentary Secretary to the Treasurer, Mr David Bradbury, for his good work in this area. When we first got elected to government in 2007, we started to look at some of the issues around business, small business, consumer protection and the Corporations Act in particular to make improvements to strengthen the regulator, the Australian Securities and Investments Commission, to make all those changes progressively in consultation with the industry and in consultation with stakeholders to make sure that we take on those tough challenges. Mr Deputy Speaker Georganas, you would agree that when it comes to tackling the tough issues, that when it comes to delivering, actually getting these things done, it always seems that it is Labor governments who do these things and not just talk about them, which is what we often see from the other side.

In particular, this bill introduces an administrative process for ordering the winding-up of abandoned companies to facilitate access to the government's General Employee Entitlements and Redundancy Scheme, called GEERS. It also introduces a regulation-making power to prescribe methods of publication of notices relating to events before, during and after the external administration of a company. The bill also makes miscellaneous minor and technical amendments including requiring insolvency practitioners appointed to a Paid Parental Leave employer to inform the Department of Families, Housing, Community Services and Indigenous Affairs, FaHCSIA, of their appointment regardless of whether FaHCSIA is a creditor of the company. So it is a step forward on the complex issue of how to deal with a company that technically fails or shuts down and may or may not re-emerge.

These are sometimes difficult questions and many people have deliberated over these issues for years and not been too sure where to begin. Mr Deputy Speaker, I can assure you that this Labor government does know where to begin, does know how to respond to what is clear market failure in areas, including the abuse of consumers and workers, and does know how to do it in a measured way—not stepping too far and recognising and acknowledging that for very good reasons some companies do fail and may begin again. It might be a genuine failure and we need to acknowledge that we do not penalise those who are the true entrepreneurs and innovators—those who take personal risks and take risks with other peoples' capital and their own capital—and make sure that we do not penalise them by making life too difficult. Some of the greatest economies in the world are those where you have successions of failed businesses and enterprises who continue to reappear, only to succeed and become great organisations. I think we need to be careful about this distinction between genuine failure and people reforming and what is the insidious practice of phoenixing. I believe that the Corporations Amendment (Phoenixing and Other Measures) Bill 2012 does exactly that.

The bill contains three main measures: a new power for ASIC to administratively order the winding-up of a company, new powers with regard to a range of publications, and new obligations on liquidators, which I think is really important. While I talk about liquidators, it is important to acknowledge that again it is this government that has taken on some of the complex issues in the financial services sector and looked at some of the problems that are inherent. We have worked very well with the regulator to make sure that we curb, if not completely rid the community of, some of the worst practices of liquidators, for example.

The bill also provides that the Australian Securities and Investments Commission has the power to place abandoned companies into liquidation without applying to the court. That is an important power. It implements part of the government's Protecting Workers' Entitlements package election commitment and facilitates greater access to GEERS. We have seen repeatedly, year after year, that companies have failed and have left the people who work for them high and dry without access to their entitlements and without a whole range of payments that they were entitled to. It is important that we work with the regulator, the courts and others to make sure that is no longer the case.

The bill also replaces the current obligation to publish external administration notices in newspapers or in the ASIC Gazette, with a requirement to publish in a prescribed manner. Regulations will be made to facilitate the publication of these notices on a single insolvency notices website so that people can have access to it. We hear criticisms that we do not do more about the failure of a company in one instance and its reappearance in another instance. One of the ways we can respond to this, where there are clear phoenixing practices going on, is to have a single place where we can start to record all of these issues and make sure that people are aware of them.

The bill also makes further minor amendments to require that insolvency practitioners properly inform related government agencies about their appointment and what is going on in those particular areas. The bill has a range of powers in other areas and sets specific time frames. It looks particularly at the circumstances around a company that has failed. ASIC will be able to place a company into liquidation where a number of things happen. If a company has failed to respond to a return of particulars within a period of six months or not lodged any other documents in 18 months, then ASIC believes it is not carrying on a business and has powers for making a winding-up order in the public interest. This is a good thing because ASIC's workload, as the regulator, is difficult enough given the more than 1.6 million organisations it has under its charge in this country, let alone those which sit on the books with no activity at all—or with particular misactivity—or which do not respond to requests for particular documents that are required. When an organisation does not respond or comply with forms or other documents they are meant to provide, that can be the first sign that there may be a problem with that company.

It is important to arm the regulator with as many tools as is possible in a fair manner so that it can carry out its work fully and diligently. Where a company has failed to pay in full its review fee for a period of 12 months—where companies cannot even make that effort—or where there are distinct issues or problems at the most rudimentary end of their obligations to comply, then the regulator ought to have power over them in those areas. ASIC will also be able to place a company into liquidation where ASIC has reinstated the registration of a deregistered company and it believes that making the winding-up order is in the public interest.

These are extensive powers. I heard earlier a member of the opposition say that there are no new powers for ASIC. This is simply not the case. There are new powers contained not only within this particular amendment but in other areas. There has been an ongoing program from this government to give further powers, where necessary, to the regulator to be able to carry out its duties fully—in particular, where people's life savings, work entitlements or investments are involved. In cases where companies are being phoenixed the powers of ASIC that are contained in this particular amendment, as well as the powers that have been enhanced in other areas of ASIC, will apply.

ASIC's powers will also apply, for example, where ASIC has reason to believe that the company is no longer carrying on a business and there is no objection by the directors of a company to being wound up once a notification of ASIC's intentions have been registered.

The bill also provides a specific power for the regulator to appoint a liquidator to effect the winding-up and determine the remuneration paid to the liquidator. That is a really important provision. We have heard in many media reports and elsewhere of liquidators being appointed by a failed organisation, or by specific persons, for their own advantage. There have been court cases and findings against a number of liquidators and I believe—I will be corrected if I am wrong—there was a case just recently where a liquidator was not only banned but sentenced to jail over practices which involved taking advantage of the liquidation of a company in terms of the fees they were paid and some fraudulent behaviour around their activities. So it is important we also make sure that ASIC has power to appoint liquidators specifically and to determine what that remuneration should be.

There are a number of other parts of the bill. I have spoken before about the publication of insolvency notices. That is important. That will make a clearer statement about the matters that are going on with particular liquidations or the failure of certain companies, and other notifications. In all, the amendments in this bill do a range of things. Most importantly, they deal with some matters that have been outstanding for many years. They deal specifically with the consumer protection provisions and they enhance ASIC's powers to deal with phoenixing, to deal with particular directors and to deal with organisations that fail.

Very importantly, the legislation provides for proper protection of employees' entitlements by strengthening the link with the GEERS program. It provides for a range of activities to further enhance ASIC's ability to measure, monitor and deal with poor practices in the business sector. I am very supportive of this bill and these amendments and I commend the bill to the House.