Rowan Holzberger (Forde, Australian Labor Party) Share this | Hansard source

I rise in support of the Treasury Laws Amendment (Business Registries Stabilisation and Uplift) Bill 2026. In doing so, I'd like to congratulate the Assistant Minister for Productivity, Competition, Charities and Treasury not only for the work that he has done in this bill but the work that he has done for many, many years in the lead-up to this bill.

What really lies at the heart of this legislation is the insidious practice of phoenixing, which is spread across all industries, of course, but is particularly prevalent in the construction industry. I know that the now assistant minister really led the Labor Party's policies to combat that awful soul-destroying, business-destroying practice of phoenixing. We are now starting to see or hear, at least anecdotally, in the construction industry that phoenixing, while it still exists, is nowhere near as bad as it was before these reforms were introduced.

As anyone who has sat through one of my speeches before knows, I like to remind people that I did have experience in the real world. I did plenty of jobs, one of which was running a construction company. I joke every now and then when I tell people that because, really, I'm only 26. This is what construction will do to you. There is nothing like construction. It is hard to get the work, it is hard to do the work and it's hard to get paid. It reminds me of that maxim for products and services: there are three features—quality, cheap, fast—and you can't have all three at one time. It can be fast and quality but it won't be cheap, or it can be cheap and fast but it won't be quality. But construction, I think, is the one industry in which it has to be all three. It has to be on time, it has to be on budget and it has to work. There is really no industry like construction. As I say, it's hard to get the work, it's hard to do the work and it's hard to get paid, but that last feature should not be an inherent feature of the construction industry. The fact that it is hard to get paid is a failure of governments to regulate to give protection to those businesses, which are quite often sole traders or mum-and-dad businesses.

The assistant minister will have missed the very kind things that I said about him, but I remember standing in a high-rise sometime in 2018, as he was announcing the then Labor opposition's policy to combat illegal phoenixing, at the heart of which director identification numbers sat. I'm glad that he's here, because the assistant minister has done a lot of work over a long period of time. One of the reasons that I do remind people that I had a real job is that I did also work for Senator Murray Watt, and it was during that employment, from about 2018, that I stood with the now assistant minister to announce the Labor government's policy.

There's also somebody else who I met while working for Senator Watt and who I really would like to give a particular shout-out, because his story sits at the heart of this legislation and this approach to combatting illegal phoenixing. That is somebody called Les Williams, who the assistant minister may well remember. He formed the Subcontractors Alliance, and I will quote extensively from a Senate submission that he made in about 2015. I won't quote him verbatim, because I'm going to into intersperse it with some of my own commentary. But I think Les's story, and the way Les puts it, really sums up what this legislation is designed to defeat.

He began:

The Subcontractors' Alliance … was formed in Queensland following the "collapse" of the Walton Construction Companies in early October 2013.

This is a notoriously famous case, where a reputable company collapsed and left plenty of people in the lurch, but many people may not know the story. I couldn't actually find media reporting. It was only when I had a chance to talk to Les this afternoon, to catch up and let him know that I intended to bring this up today, that he told me that this story actually has a bit of a happy ending, believe it or not. But back in 2015 it was not a happy story.

Les gave some background here:

In Australia subcontractors—

this is back in 2015, so things would've changed a little bit—

are responsible for between 80% and 85% of all construction work, the highest involvement of subcontracting in the world.

What that means is that you've got mums and dads and sole traders essentially providing the infrastructure, the machinery and the labour but also the credit to do the jobs that we need to build our country. He went on:

It follows then, that subcontractors are extremely diverse small businesses ranging from Mum and Dad operators to quite sophisticated businesses. We construct, manufacture, pre-fabricate, transport, fabricate and retail—

In Forde, if you look at sole traders in construction, you've got about 2½ thousand subbies working in the construction industry who are sole traders. You've got another 1,300 or so companies based in Forde who employ between one and four employees. That's a total of 4,000 companies, from sole traders to four employees, who according to this statistic provide something like 80 per cent or so of all of the construction work that happens in this country. Nationally—this is back in 2015, remember—small business subbies employed about 800,000 people. In Queensland then, that was about 85,000 subbies employing about 250,000 people statewide.

Les said:

Insolvency in the building and construction industry—

back in 2015—

is valued at $3.4 billion annually and the debt is borne predominately by subcontractors. …

Not reported in any statistics is the value of wrongful withholding of money by main contractors due to last payment bargaining, conjured disputes and bogus defect deductions.

Anybody who has been in the construction industry knows that that is a regular practice. Les said:

It is commonplace for large construction companies or construction companies employing subcontractors to divert income from one project to another to service the others debt, make short term investments or divert cash to family trusts, all aided and abetted by their corporate advisors.

It is commonplace also for construction companies to "target" individual subcontractors. This is the insidious practice of not paying a specific vulnerable subcontractor—

as a strategy—

usually at subcontract's end, with the clear intent of forcing the subcontractor into liquidation.

That's the truly evil, awful stuff that they do behind the scenes. The stuff that they do in the open is really just as bad.

When you look at payment terms, I've worked for companies where there was something like 90-day payment terms, but 30-day payment terms are common. That means that you work for 30 days, you submit an invoice and then you wait another 30 days to be paid. Basically, you're carrying the debt. You're giving credit to your head contractor for 60 days or so, leaving you particularly vulnerable at the end of the contract, which is when most construction insolvencies happen. They happen at the end of the month, when payments to subbies fall due. Les said:

Construction companies with hold a total of 5% of the subcontract value as security [retention] usually in cash—

which they then use to fund jobs or use it as they will without any permission of the actual subcontractor that they're withholding it from. And, when a strategy of driving that subbie into the ground pays off and they go bust, they pocket that whole retention payment.

So here it was that Deloitte did a report into Walton Construction. According to Les, it said:

The Construction arm of the business is classified as Tier Two builder. In Construction terms this refers to a company with a turnover of between $150m and $500m and with the ability to operate multiple jobs with contract values exceeding $50m at any one time. The contracts are predominately associated with health care, government and large scale residential.

This was not a small, two-bit player. Walton had an advisory board, so they got into trouble. The report indicated that they had about $337 million of work. They had about $240 million or so that was owed to subbies. There was a lot going on there, and it was later identified that by about July 2012 they were trading insolvent.

Les said:

In July 2012, Walton restructured his companies. Walton's construction companies at this time inserted a "novation clause" in their subcontracts. This gave Walton the ability to transfer subcontracts without subcontractors consent when he chose to "phoenix" or "transfer assets".

… NAB—

who should be ashamed of themselves because of what they did in this case—

concerned about their financial exposure, refused to issue Walton any more bank guarantees—

and forced them into a corporate restructuring, which effectively took place in 2013. NAB essentially helped them exit the industry. Walton set up two new companies and placed the company into liquidation, but NAB managed to preserve their debt in one of the companies that continued to operate. Les said:

The report to creditors indicated 1350 subcontractors owed $70 million and over 100 of his staff owed approximately $1.5 million in wages and entitlements that were ultimately paid by design by the taxpayer

There is evidence of NAB's overview of the phoenix companies until those entities entered administration. It was also evident that NAB acted with callous disregard for subcontractors and, along with Walton and his advisers, acted out of self-interest and to the detriment of subbies. In June 2013, prior to them entering administration, they moved money around. It is a sorry tale, with a human face.

Les had three examples. In Townsville, Mark Stevens, the owner of a successful scaffolding business, lost his equipment valued in excess of $1 million. He lost his house, his land and his work depot, valued at $1½ million. He endured a marriage breakdown and lived in his car for some time. He had his equipment impounded onsite for quite some time without payment, and his equipment was ultimately damaged by others.

On the Sunshine Coast, the owner of a landscaping business subcontracted by Walton lost his house, his life savings, his car, his business and his wife and two kids. The majority of his subcontract took place in the months of July, August and September 2013, when Walton and NAB were well aware of their insolvency and their intentions to avoid their liabilities. In Melbourne, one manufacturing subcontractor invested in factory extensions based on the value of the work he subcontracted with Walton after being given assurances, and he ultimately lost over $500,000 in revenue and his factory. That's one of many stories. That is one of the things that I know provided impetus back in 2015 to the now assistant minister's work in this area with individuals like Les, who didn't give up.

The end of this story is a good news story for Les. He ended up taking NAB to a class action and, only a couple of months ago, won $20 million. That's not all of it, but it is some of it. If there is a story of David taking on Goliath, it is that story—and that story hasn't quite been told publicly yet. To Les Williams, to the assistant minister and to everybody who has helped with this legislation, to see what is at least anecdotally having an impact, all power to you and all power to this legislation. And for the sake of the mums and dads and sole traders who live in Forde, I commend the bill to the House.

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