Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

I am pleased to rise to speak on the Corporations Amendment (Phoenixing and Other Measures) Bill 2012. The question before the House this evening is not whether phoenixing—which is, I might say, a particular ugly word when it is used in this context—is a deeply objectionable practice. Of course it is deeply objectionable when company directors and managers use the corporate structure to defraud creditors. There is no question in the mind of anybody in this place as to whether phoenixing is a highly undesirable kind of conduct which ought be prevented to the maximum extent possible. The question before the House this evening is a more specific and precise one. The question is this: will the measures contained in this bill in fact be effective in dealing with the question of phoenixing—indeed, are they in fact linked in any way to the conduct of phoenixing?—or are they instead yet another example of a technique that is all too common from this government: the technique of identifying a problem and offering what is claimed to be a solution, which, on analysis, is found to be deeply deficient and ineffective? This technique is one that we see used all too commonly. I put it to the House that we are seeing this technique being used yet again.

I want to make three observations in relation to this bill in the time available to me. Firstly, phoenixing activity is of course highly objectionable and to be deplored. Secondly, there is no evident linkage between the measures contained in this bill and phoenixing conduct. Thirdly, the measures in this bill give a degree of additional discretion and additional power to a regulatory agency, ASIC, and that discretion and those powers can be exercised without the need to obtain, for example, a court order. In the coalition's view, that discretion and those powers are excessive.

Clearly, the scope of these powers and that discretion needs to be weighed against the effect that these measures will have in dealing with the evil of phoenixing. When on analysis we see that there is very little reason to have confidence that these measures will have any effect, that adds weight to the serious concerns that the coalition has about the excess of additional discretion and additional powers given to ASIC.

Let me turn to the first point that I want to make, which is that it is uncontentious that phoenixing conduct is to be deplored. The term 'phoenixing' is understood to mean in this context the transfer by directors of the assets of a company that has substantial debts to a new company of which typically they are also directors. To take a specific example, you might have a company called Paul Fletcher Ventures Pty Ltd that is engaged in dubious conduct and that has accumulated substantial debts.

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