Federal Labor will expose dodgy directors and crackdown on phoenixing

Federal Member for Bendigo Lisa Chesters MP, has announced locally today Labor’s plan to protect employees and small businesses from dodgy phoenix activity through a package of reforms.

Ms Chesters said dodgy business practices like phoenixing and wage theft is unacceptable and Central Victorian workers have been some of the hardest hit by dodgy employers engaging in rogue phoenixing behaviour.

“Labor’s plan will crack down on dodgy directors who engage in ‘phoenix activity’, where they deliberately burn companies in an attempt to avoid their obligations to employees, government and honest businesses.

“These rules would stop a repeat of what we believe has occurred with a number of Bendigo cafes being placed in administration.

“Currently it is easier to become a company director than open a bank account, yet the Government has barely raised a peep about phoenix activity.

“It’s outrageous that the Turnbull Government continues to turn a blind eye on fraudulent phoenixing costing Australian workers billions in entitlements.

“It’s been estimated in 2012 to cost up to $3.2 billion annually, this unfair practice hurts employees, small businesses, subcontractors, and families,’ said Ms Chesters.

Phoenixing allows owners to avoid paying money owed such as superannuation, leave entitlements and tax to the failed company’s creditors, which are often the company’s employees, other small businesses and the Australian Tax Office.

“The loss of superannuation especially is so damaging to individuals and families who are preparing for their retirement and unfortunately we have a Liberal Government who is not paying any attention to this rort in the system.

“Statistics from Industry Super Australia show that nearly 15,000 workers in the Bendigo Electorate have been underpaid their superannuation entitlements at an average of $1,892 a year.

“Labor will enforce policy that will see employees and business owners benefit from new enforcement tools for the Australian Securities and Investments Commission, tightened laws protecting employee entitlements, and harsher penalties to deter and punish insidious phoenix activity,’ said Ms Chesters.

Labor’s new plan will:
· Require all company directors to obtain a unique Director Identification Number with a 100-point identification check.
· Increase penalties associated with phoenix activity
· Introduce an objective test for transactions depriving employees of their entitlements
· Clarify the availability of compensation orders against accessories
· Consult on targeted integrity measures based on the recommendations of the Melbourne Law School / Monash Business School Phoenix Research Team recommendations.

“It’s time the Turnbull Government backed Labor’s plan and focused on protecting workers and the vast majority of scrupulous businesses from the harm caused by the crooked few,’ said Ms Chesters.