12 September 2017
Transcript - #2017031, 2017

Interview with Jon Faine, ABC 774

SUBJECTS: phoenixing; superannuation; same-sex marriage; Tim Wilson’s colouring-in book

JON FAINE:

Kelly O’Dwyer good morning to you.

KELLY O’DWYER:

Good morning Jon, how are you?

JON FAINE:

I’m very, very well. Let’s deal with phoenix companies first, we’ll come to same-sex marriage, energy policy, all sorts of things in a moment. 25 years ago I did a report on phoenix companies, what I described as serial killers of small business – people who run a company into the ground, rack up huge debts, mostly to the tax office, and then shut down on a Friday and then reopen as if nothing was different except for the company structure the following Monday. What are you planning to do about it?

KELLY O’DWYER:

Well Jon, you are 100 per cent right that this has been a problem over a very long period of time and no government has been able to effectively tackle it. You’re right that there are a lot of people who are hit by these sorts of company operations that are deliberately designed to actually strip out assets and not pay their creditors, their employees, and also the Australian people because they often owe a lot of Australian tax. The Government is actually pulling together a suite of measures to crack down on illegal phoenixing activity. We’re doing that by firstly making sure that we identify the directors involved in all companies so we’re introducing a director identification number…

JON FAINE:

A director identification number. So we have an ABN and an ACN, an Australian Company Number, and now you’re going to have a director’s number as well?

KELLY O’DWYER:

Well we’re actually looking at how we can better integrate all of these identifications into one single identification…

JON FAINE:

Because we have a Medicare number and we have a passport number and we have a driver’s licence number. Maybe just an Australia card, a universal ID?

KELLY O’DWYER:

Well it’s interesting you talk about that – we’re looking at how, for instance, we can use biometric identification for a range of government identifications…

JON FAINE:

Sorry by biometric do you mean eyeballs or fingerprints or what?

KELLY O’DWYER:

We’re looking at all of those biometric identifications to see how it is that we can most usefully identify people to confirm who it is that they say they are. We’ve got a weird situation at the moment where somebody who has a bad intent, who wants to set up a company that might look to engage in illegal phoenixing activity, can go down the street, find a homeless person, get their details, and they can sign them up as a director of this company without their knowledge or consent. Now, we think that that’s absolutely wrong…

JON FAINE:

Well the same thing used to happen back with the bottom of the harbour schemes, nothing’s new.

KELLY O’DWYER:

100 per cent, but this has got to be tackled. And this is why having a director identification number will not only mean that people have to consent, but we can also map the relationships between individuals who have been involved in more than one failed company and various different regulatory agencies across government, and also different departments across government, to map out the information and activities that’s happened.

JON FAINE:

You can do that already, you just have to prosecute people more readily, put more money into the prosecution, the investigation, and seeing it through rather than saying it’s all too hard.

KELLY O’DWYER:

Well let me say this – it’s going to shock you to learn this, but a lot of government isn’t always particularly efficient and that there are lots of siloed areas of activity where government departments don’t properly cross reference information. That there are all sorts of secrecy provisions at times, and I’ve had to pass a whole heap of legislation so for instance, different regulators can talk to one another so that they can share information across government so that we can more effectively prosecute those people who are doing the wrong thing. At the end of the day…

JON FAINE:

So you don’t really need a new system, you just need a better culture.

KELLY O’DWYER:

No, no, it’s also about making sure that we’ve got the right penalties in place, we’re actually putting in place specific phoenixing offences and making sure that where we identify high-risk individuals, people who’ve been engaged in phoenixing activity in the past, that we’ll be able to prevent such harm occurring into the future by making sure we’ve got security bonds…

JON FAINE:

How? You know who these people are. There’s a coterie of people that the tax office knows exactly who’s duded them over and over again.

KELLY O’DWYER:

I’ll tell you how – which is to make sure that we’ve actually got, in effect, security bonds from these people before they’re allowed to set up a company, so a security deposit, so that if there are outstanding liabilities, that those will in fact be covered. Some people, though, should be banned outright, which is what we’ll obviously do, for those people who are serial offenders and we want to make sure that where people potentially run into trouble, we want to make sure that those people who are doing the right thing are obviously not penalised, but those people who are looking to potentially appoint a friendly liquidator so that they can strip out the assets and start again, that they’re not able to do that.

JON FAINE:

Alright, I look forward to seeing the detail and the follow through that’s going to be required. The front page of the Financial Review reports that you’re “trying again” on long-promised changes to boards and governance of super funds, particularly the union funds, by saying they have to have one third directors who are independent. Why do you think you’ll have the numbers in the upper house now when you’ve never had it before?

KELLY O’DWYER:

Well we’re putting forward a suite of measures to protect members’ money in superannuation funds. Let’s not forget that 25 years ago, when we first set up the compulsory superannuation system, this was worth around about $136 billion. It’s increased by more than 1500 per cent. It’s now a $2.3 trillion industry and within the next 10 years it’s going to grow to about $4 trillion.

JON FAINE:

And the union funds that you’re in fact trying to change are the most efficient and productive in the sector.

KELLY O’DWYER:

So it’s not correct to say, Jon, that we are targeting industry funds. The changes that we are proposing are across the board changes that apply to corporate funds, to retail funds, and also to industry funds. These changes are broad ranging and what they will do is they will provide more accountability and more transparency over the use of members’ money. We are going to be giving the regulator strengthened powers to be able to ensure that members’ money is spent in their best interest because let’s not forget, if funds are not spending money in members’ best interest, that has a compounding impact over time and it ultimately means a lower retirement income when people need to draw down on those funds…

JON FAINE:

What are the examples that you refer to in order to provide evidence to back up the suggestion that funds are spending money contrary to the members’ interests?

KELLY O’DWYER:

Well right now, Jon, in fact the regulator doesn’t have a lot of detailed information about how money is spent. So for instance, a fund can say that they are spending a whole heap of money in relation to sponsorship activities, and there were reports in The Australian only yesterday that talked about certain funds that were kicking back, for instance, over $1 million to the union movement, and some of that’s to do with sponsorship money, and the regulator cannot…

JON FAINE:

Well that can be in their interest, that’s who their members are, they’re helping their members by contributing, I mean for instance, the construction industry funds invest in creating jobs for workers in the construction industry by investing in properties and buildings, that makes absolute sense doesn’t it?

KELLY O’DWYER:

Well no, Jon, if we don’t know anything other than there is this big whack of money going in sponsorship and there is no detailed breakdown as to how that money is used, I think members quite rightly would ask: is this being used in my best interest? And right now the regulator cannot give them that assurance that it is. Let’s not forget that during the Trade Union Royal Commission that was recently held, we heard evidence that there were superannuation liaison officers who were being paid $96,000 for two days’ worth of work. That money was going directly back to the union movement and when put on the stand and questioned about this, a particular officer who was being paid this amount of money couldn’t justify that this was in members’ best interest…

JON FAINE:

Now I’m not saying for a minute that you should turn a blind eye to things that are wrong, but I might say, it is small compared to what’s being disclosed as going on, for instance, at the Commonwealth Bank, this is trifling.

KELLY O’DWYER:

No, Jon, you can walk and chew gum. The Government is taking very decisive action when it comes to putting in protections for members’ money, also in banks as well. And you’ll know that APRA has launched very recently a review of what’s going on at the Commonwealth Bank. That’s appropriate, they’re the regulator…

JON FAINE:

Dragged kicking and screaming after everybody, the media, the Opposition, everybody was saying do something, do something. It’s taken forever to get some action.

KELLY O’DWYER:

Well I don’t think that’s right at all, Jon, and the Government only this week is going to be bringing in legislation that, for the first time, will establish a one-stop shop for consumer complaints where if they’ve got a complaint against their bank, they will be able to get an independent arbiter to rule on that in a timely fashion. It won’t cost them money to go to it, it will be binding on that financial institution, and they will be able to pay compensation where that’s appropriate. Now this is a real game-changer. It’s not simply talking about doing something, it’s actually doing something. And this is where there is a clear difference between the Government and Labor on these questions. We are acting, we’re not talking about it.

JON FAINE:

Two other questions if I may, the ballot papers for the vote, the voluntary non-binding vote on marriage equality, same-sex marriage, about to be posted out. Despite assurances from your side of politics, in particular the Prime Minister and the Minister in charge of the process, Mathias Cormann, who’s acting in the role at the moment, despite all the assurances from both the Yes and the No side, the fringe players in this debate have decidedly turned it ugly. Kelly O’Dwyer, even on talkback and certainly on social media we’re seeing evidence on both sides of the debate of all the things that all sensible people said shouldn’t happen. Is this acceptable?

KELLY O’DWYER:

Well look, unfortunately there will always be some people in our community, whether they be on the Yes case or the No case, who will make ugly comments…

JON FAINE:

So is that always going to happen?

KELLY O’DWYER:

But I think most Australians are in fact very respectful and very thoughtful and are conducting themselves in the manner that we would expect…

JON FAINE:

I agree, but some people aren’t, was this not always inevitable?

KELLY O’DWYER:

Well in every election campaign, I would argue, whenever issues come up, we can see the ugly side of certain personalities. Now, I think it’s incumbent upon those people who are in the parliament to be able to demonstrate through our behaviour and our discussions and our advocacy, that the clear leadership on how to conduct a respectful debate, the Government wanted to put in place all the protections that apply to an election campaign through a compulsory plebiscite, which was the promise that we made to the Australian people before the last election, unfortunately that was knocked back…

JON FAINE:

Should they not all be in place already? Because we’re seeing people saying and writing and publishing things that are deeply hurtful and even dangerous to the mental health and wellbeing of some of the most vulnerable people in our community and they are saying we warned you about this and you brushed our warnings aside.

KELLY O’DWYER:

But Jon, actually that was voted down by the Labor Party and it was voted down by the Greens. Unfortunately, they did not allow us to fulfil our election commitment…

JON FAINE:

You’re in charge of the process, you are the Government, you’ve got carriage of it.

KELLY O’DWYER:

The Government has now proceeded to fulfil our commitment and we have said, very openly, we are very happy to pass the same protections that exist in the electoral laws right here right now with the agreement of the opposition and the Greens and the crossbench. I know that the Special Minister of State is actually working very hard with them to be able to deliver that. But it’s not for lack of the Government trying to actually fulfil this, this has been frustrated at every turn by those people who would seek to deny the Australian people a say on this issue. People who quite rightly expect to be able to have a say as a result of the commitment that was given before the last election.

JON FAINE:

Just finally, have you got a colouring-in book featuring pictures of you and your family on every page to distribute throughout your electorate? Because that’s what one of your colleagues and one of our former regular contributors has done. Tim Wilson, the Liberal Member of Parliament for Goldstein has distributed a colouring-in book to schools in his community which features him, and sometimes his partner, on every page for the kiddies of Brighton and surrounding suburbs to colour-in on.

KELLY O’DWYER:

I don’t, but I think it’s a terrific innovation for the kids and I’m sure…

JON FAINE:

Are you kidding? Taxpayer-funded self-aggrandisement.

KELLY O’DWYER:

I don’t think it is on every page. Look I haven’t actually seen it myself but I’m sure that there are people in his local community who are very appreciative that he has put together something that will help with mindfulness. I know that certainly in aged-care homes that’s certainly a feature.

JON FAINE:

You can put out a colouring-in book featuring landmarks in the electorate, but to put yourself on nearly every page, on taxpayer-funded money, it’s a bit ridiculous isn’t it? You can’t really be defending it?

KELLY O’DWYER:

I have the highest regard for my colleague Tim Wilson…

JON FAINE:

As do we, a regular on this program over many years before he embarked on a parliamentary career.

KELLY O’DWYER:

I haven’t seen the colouring-in book but I certainly don’t have any objections to colouring-in books. I mean there are all sorts of benefits that people can have from colouring-in and I certainly know there has been a recent adult craze for colouring-in books. I don’t quite get it myself but I know that there are others who are absolutely passionate about it and I certainly know that my young daughter loves the colouring-in books so I’m sure it will be gratefully receive.

JON FAINE:

Well you can all start to do the same thing if it works so well for one it’ll work for everybody. Thank you for your time on all those issues this morning.

KELLY O’DWYER:

No worries.