House debates

Monday, 7 December 2020

Bills

Corporations Amendment (Corporate Insolvency Reforms) Bill 2020; Second Reading

7:23 pm

Photo of Peta MurphyPeta Murphy (Dunkley, Australian Labor Party) Share this | Hansard source

Everyone knows how hard this pandemic has hit small businesses. There are many people who have worked their entire lives to build up a family business, who have never taken a cent in support payments from the government, who have found themselves not only needing support—it might have been through JobKeeper; it might have been through some of the cashflow measures—but also, sadly, losing their business and needing support in the form of unemployment benefits. We also know that as the government withdraws supports like JobKeeper more businesses are going to hit the wall. We are concerned that, at the end of this month, an avalanche of insolvencies are expected to hit at the end of the regulatory freeze on bankruptcies. That is a human story and a human tragedy for so many people who have put their heart and soul into their business. As speakers before me have said, Labor is supportive, and I'm supportive of this government working to help small businesses, in particular, get through this period if they can.

The Treasurer and Assistant Treasurer announced in September what they described as US chapter 11-style insolvency reforms, changes to see small businesses at risk of collapse able to keep trading and work out their problems with a small-business-restructuring practitioner instead of appointing an administrator. Whilst on paper this may be a good idea, and perhaps ultimately it may work, the great concern is that this is another example of a photo opportunity without follow-through, of an announcement that sounds like it might address a really significant problem but turns out not to be based on the hard policy work having been done.

One of the significant concerns for my electorate of Dunkley is that the majority of small businesses aren't eligible for these reforms. These measures are only for incorporated businesses, which means that sole traders, partnerships and family businesses structured in other non-incorporated ways will miss out. I can tell this House that I had almost an avalanche of inquiries into my office early on when the government finally decided to bring in wage subsidies in the form of JobKeeper, particularly from sole traders and partnerships who were going to be left out. This is not a small cohort of small businesses in this country. It's a significant cohort of people, a significant cohort of families who need to pay the bills, who need to pay their mortgages, who have debts that have racked up because they've tried to keep their business going, notwithstanding that they may have been eligible for JobKeeper. They are likely to miss out, with the way that this legislation and this scheme are structured.

There is also the concern that the changes could just push the insolvency issue further down the supply chain to other small businesses and sole traders. One of the big concerns, particularly in my electorate, is whether or not this will actually be a negative for the tradies, for the trades men and women who have set up their own businesses and who usually work as subcontractors on larger projects, on credit for other businesses. They often work on housing projects and expect to be paid at the end of it, but the pandemic crisis has hit, and they haven't been paid. Will this legislation and this process mean that they will get their money, or will sole traders, partnerships and family businesses just be left out in the cold? Will they be able to get the unpaid invoices paid? If they can't, they're the people that are going to continue to struggle to pay the bills to keep their families afloat.

The plight of subcontractors, particularly in the construction and building industry, as I said, is something that is right at the heart of many of the suburbs in my electorate where trades men and women work for themselves. It was too often the case before the pandemic that we would see a tradie working as a subbie to a larger business and ending up out of pocket when that larger business either failed or disappeared without paying their bills, when they pocketed the fees for the contract but didn't pass it down to the small businesses below them. This was always a concern before the pandemic, and we're worried that it will be a greater concern now.

That's why I was proud that the Labor Party took to the last election a commitment to a tradies guarantee for cascading trusts, to make sure that those hardworking trades men and women who work on large projects as subcontractors can be guaranteed that, at the end of the day, no matter what the head contractor does, they will get paid for their work. This was a policy based on a review called the Murray review. That review, amongst a number of things, identified that 22 per cent of all insolvency events happened in the construction sector, with 1½ thousand construction companies entering into external administration in 2016-17 alone. This is something that the federal government can and should be looking at to help subcontractors. The federal government, through its procurement policy, has the ability to put in place cascading statutory trusts to make sure that—

Debate interrupted.

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