Murray Watt (Queensland, Australian Labor Party, Shadow Minister for Northern Australia) Share this | Hansard source

I rise to speak in support of the Commonwealth Registers Bill 2019. In doing so I want to focus on one measure in particular, and that is the introduction of a director ID number, which will require company directors to provide proof of identification before registering companies. This is something that Labor and many industry and union groups have called for for some time, and I'm glad that finally we are seeing some action from the government on this point.

I've spoken a lot about this issue, both in this term and in the last term of parliament, because it has particular relevance to a number of regions in my state—in particular the Gold Coast and the Sunshine Coast where, unfortunately, for many, many years we have seen rampant phoenixing of companies, particularly in the construction industry but also in a number of other industries, including the security industry and contract cleaning. One of the things that I've said in talking about this issue in the past is that in the absence of a director ID number it's actually easier in Australia to register yourself as a director of a company than it is to register a dog. When you think about the responsibilities of company directors and the potential for ordinary people to be defrauded by rogue company directors, that is ridiculous. For a long time, we have needed to put in place much stricter restrictions around who can register a company and the ability to trace them. As I said, the issue of phoenixing is a rampant problem in my home state of Queensland, particularly on the Gold Coast and Sunshine Coast.

Just as a quick reminder: what we're talking about is the ability of company directors to rack up big debts, whether it be to suppliers who supply goods and services to them or to subcontractors who come and do work for them. The big developer or the big building company will get people to do the work, owe them some money then close down the company, strip the assets out of it in doing so and move those assets to a new company. Then the company director gets on with life but leaves a trail of destruction behind them in the form of suppliers and subcontractors who have provided services, probably incurred debts themselves in doing so, but remain unpaid. I've met many small, usually mum-and-dad businesses, particularly on the Gold Coast but also the Sunshine Coast, who have been forced to shoulder unsecured debt and have been left in the lurch by big construction companies who go bust without paying their bills, and I think it's particularly important that this step is being taken now because, in the current COVID-19 environment, tradies have got enough to worry about without wondering if they're actually going to get paid for their work.

The reality is that tradies, other subcontractors, security guards and contract cleaning employees are often owed money for long periods of time anyway. They should actually be getting paid sooner—and, of course, should actually be getting paid—rather than ripped off by phoenixing company directors. Now, phoenixing is a problem we're likely to see more of as, on this government's watch, we enter a recession, the first recession we've seen in Australia in nearly 30 years. Some experts are even linking an expected rise in phoenixing cases to exactly when federal government support is due to dry up in September when JobKeeper will end, the safe harbour laws will be removed, banking loans will be called in and the jobseeker additional payment will end. We face a fiscal cliff in September, when a range of support for businesses and individuals is due to dry up. That's exactly the time when we are likely to see more phoenixing activity by rogue directors who don't want to pay their bills, so putting this measure in place will go some way towards protecting people from being ripped off.

We're already, in fact, hearing reports of a number of businesses on the Gold Coast using coronavirus as an excuse not to pay their subcontractors. That is just not right and it's not fair, and that's why I and a number of other people on the Labor side of this parliament have been speaking up on behalf of those subcontractors for some time. I note that under the Queensland Minister for Housing and Public Works, Mick de Brenni, the Queensland government has taken significant steps to protect subcontractors and to make sure they get paid. We haven't seen enough action from this federal government up until now. There is much more to be done at the federal level but, credit where credit's due, I'm glad that they have eventually got around to introducing the director ID number that we've been calling for for a long time.

I will give just a couple of local examples. When a major Gold Coast based construction company, MJM Projects, folded in January it owed workers and subcontractors over $4 million, and they've been told they're not likely to see any of that money. On the Sunshine Coast, the latest high-profile building company collapse has left painters and plumbers trying to claw back massive bills—$150,000 in one case. This is money that they've been chasing for months anyway. Similarly, subbies and trade creditors were owed more than $3.6 million when another major builder, RiCon, entered administration in January. In the last month, we've seen more Queensland businesses come crashing down, including Bulkbuild, a building company which has worked on projects for some of Australia's leading organisations, which owes creditors about $1.6 million, most of it to subcontractors.

As I say, I've met in person with a number of subcontracting firms, often mum-and-dad businesses, that have been destroyed as a result of crooked corporate conduct, particularly phoenixing. I've met people who have literally lost their homes and lost their marriages because they've been left at the end of a queue, not protected by federal laws, when it comes to getting paid. So I certainly hope that the changes that are being introduced today—we've called for these changes to happen for a long time—will go some way to cracking down on those dodgy, illegal practices and protect hardworking people, who are not rich people, from being ripped off by larger, dishonest entities.

There is a lot more to be done at the federal level to tighten laws and enforce the laws that we do have to protect subcontractors from this kind of exploitation. I've asked about this issue in a number of estimates hearings, particularly with ASIC, and I have to say that I haven't been very impressed with the effort that they've put into this topic. I understand that they are a very stretched organisation and that there probably is an issue of resourcing that the government needs to look at. This is a massive problem. It amounts people being ripped off to the tune of billions of dollars over the course of a year, and ASIC has got to actually take this issue seriously and protect these smaller entities who are being ripped off far too often. There is more to do. We should be policing these issues more. We should be enforcing the laws more than we are. But, credit where credit is due. This proposal to introduce a director ID number is good, and that's why we will be supporting the bill.