List of recommendations
Recommendation 1
2.62
The committee recommends that ASIC conduct a review of
administrators' and liquidators' reporting requirements and the range and
extent of information it requires to be reported and, where necessary, make
changes that will ensure the regulator is able to fully inform itself, the
Parliament and the public with complete, relevant and up-to-date data on
insolvencies.
Recommendation 2
2.63
The committee recommends that the government provide an additional
budget appropriation to ASIC in the 2016–17 budget and over the forward
estimates, if required, which is sufficient to ensure that ASIC has the
capacity to conduct analysis and provide a wide range of relevant, up-to-date
insolvency data.
Recommendation 3
2.64
The committee recommends that ASIC require all external administrators'
reports to be lodged electronically in the Schedule B format.
Recommendation 4
2.65
The committee recommends that ASIC make better use of external
administrators' reports and other intelligence in order to improve the standard
of publicly available information, provide early warning to industry
participants about repeat and concerning insolvent practices and lead to a more
effective market.
Recommendation 5
3.72 The committee recommends that the ATO and ASIC
increase their formal cooperation with superannuation funds to coordinate
measures around early detection of non-payment of superannuation guarantee.
Recommendation 6
3.73 The committee recommends that privacy provisions which
may inhibit information flows between the ATO and APRA regulated superannuation
funds be reviewed and that the ATO seek advice from the Office of the
Australian Information Commissioner as to the extent to which protection of
public revenue exemptions in the Australian Privacy Principles might facilitate
improved information sharing.
Recommendation 7
3.74 The committee recommends that the ATO continue to
actively monitor the tax liabilities of businesses in the construction industry
in order to ensure that debts owed to the Commonwealth are paid.
Recommendation 8
3.75 The committee recommends that if necessary, the
government make an additional budget appropriation to the ATO in the 2016–2017
budget for the purpose of enabling the ATO to recover the outstanding tax
liabilities of construction industry businesses.
Recommendation 9
4.15 The committee recommends that construction
industry participants, particularly those representing the interests of
subcontractors, develop partnerships with mental health support organisations
to provide ready access to support, counselling and treatment for people in the
industry who may suffer from the adverse mental health effects of the financial
distress caused by contractual disputes and insolvency in the construction
industry.
Recommendation 10
4.33 The committee recommends that the government fund
an independent analysis of the effects of the high rate of insolvency and
related issues on productivity and innovation in the construction industry.
Recommendation 11
5.34 The committee recommends that ASIC, in
consultation with ARITA, work out a method whereby external administrators can
indicate clearly in their statutory reports whether they suspect phoenix
activity has occurred. For example, to serve as a red flag to ASIC, include a
box in the reporting form that external administrators would tick if they
suspected phoenix activity.
Recommendation 12
5.84
The committee recommends that consideration be given to
amending confidentiality requirements in statutory frameworks of agencies
participating in the Phoenix Taskforce to permit dissemination of relevant
information to the ATO.
Recommendation 13
5.85
The committee recommends that more resources, including
specific purpose budget appropriations be directed to whole–of–government
strategies aimed at preventing, detecting and prosecuting instances of illegal
phoenix activity.
Recommendation 14
5.86
The committee recommends that regulators increase
engagement efforts with industry participants aimed at increasing and enhancing
information flows.
Recommendation 15
6.59 The committee recommends that licensing regulators
should undertake random financial health spot–checks throughout the life of a
licence-holder's licence. Where a business fails to meet the standards
required, it should be required to show cause as to why its licence should not
be conditioned, downgraded, suspended or cancelled, depending on the extent to
which the business has not met required standards.
Recommendation 16
7.37
The committee reiterates Recommendation 17 of the
Economics References Committee’s June 2014 report of its inquiry into the
performance of ASIC in these terms: 'The committee recommends that ASIC, in
collaboration with the Australian Restructuring Insolvency and Turnaround
Association and accounting bodies, develop a self-rating system, or similar
mechanism, for statutory reports lodged by insolvency practitioners and
auditors under the Corporations Act to assist ASIC identify reports that
require the most urgent attention and investigation'.[1]
Recommendation 17
7.38
The committee recommends that ASIC look closely at its record on
enforcement and identify if there is scope for improvement, and if legislative
changes are required to advise government.
Recommendation 18
7.39
The committee recommends that the government ensure that ASIC is
adequately resourced to carry out its investigation and enforcement functions
effectively.
Recommendation 19
7.47
The committee recommends that the Legislative and
Governance Forum for Corporations give consideration to recommending amendments
to the Corporations Act to ensure that the Director Penalty Regime covers GST
liabilities.
Recommendation 20
7.56
The committee recommends that section 596AB of the Corporations
Act 2001 be amended to:
-
remove the requirement to prove subjective intention in
relation to phoenixing offences;
-
introduce a parallel civil penalty contravention in similar
terms; and
-
extend the application of the section to all forms of external
administration, not merely liquidation.
Recommendation 21
9.16 The committee recommends that ASIC and the ATO
continue to develop and implement programs designed to monitor the integrity of
the payment system, with the aim of referring relevant matters to relevant law
enforcement agencies.
Recommendation 22
9.17 The committee recommends that state and territory
government departments and agencies responsible for administering their security
of payment legislation closely scrutinise the practice of providing false
statutory declarations and where necessary, launch prosecutions as a practical
deterrent.
Recommendation 23
9.18 The committee recommends that each state and territory
government department or agency responsible for the relevant security of payments
act should follow the example in Queensland and publish publicly available,
de-identified information concerning the outcome of payment disputes.
Recommendation 24
9.36 The committee recommends that it be made a
statutory offence to intimidate, coerce or threaten a participant in the
building industry in relation to the participant's access to remedies available
to it under security of payments legislation.
Recommendation 25
9.61 The committee recommends that state government
departments and agencies responsible for the relevant security of payments act
provide education, awareness and support for industry participants who may wish
to access remedies available to them under the relevant legislation.
Recommendation 26
9.62 The committee recommends that industry groups
should also be proactive in educating and training members on the relevant
payment systems. This should include streamlining complaints and dedicated help
lines.
Recommendation 27
9.77 The committee recommends that adjudicators of
payment disputes under the relevant security of payments act should be required
by law to be independent and impartial.
Recommendation 28
9.108 The committee recommends that following completion
of the steps recommended in chapter 10 in relation to Project Bank Accounts on
construction projects where Commonwealth funding exceeds $10 million, the
Commonwealth enact national legislation providing for security of payment and
access to adjudication processes in the commercial construction industry.
Recommendation 29
10.55 The committee recommends that commencing as soon as
practicable, but no later than 1 July 2016, the Government undertake a two year
trial of Project Bank Accounts (PBAs) on no less than twenty construction
projects where the Commonwealth’s funding for the project exceeds $10 million.
Recommendation 30
10.56 The committee recommends that after the trial has
concluded, a timely evaluation of the trial of PBAs on Commonwealth funded
projects be conducted with a view to making the use of PBAs compulsory on all
future Commonwealth funded projects and mandating extending the use of PBAs to
private sector construction projects.
Recommendation 31
10.57 The committee recommends that, while the
Commonwealth trial of Project Bank Accounts is underway, the Attorney-General refer
to the Australian Law Reform Commission for inquiry and report a reference on
statutory trusts for the construction industry. This inquiry should recommend
what statutory model trust account should be adopted for the construction
industry as a whole, including whether it should apply to both public and
private sector construction work.
Recommendation 32
11.37 The committee recommends that the Council for the
Australian Federation and state and territory regulators continue to develop
external equivalence for licences in the building and construction industry.
Recommendation 33
11.38 The committee recommends that each state and territory
licensing regime contain three key requirements:
-
that licence holders demonstrate that they hold adequate
financial backing for the scale of their intended project. This capital backing
requirement should be graduated, with increased levels of proof required for
more significant projects;
-
that on registration, licence holders provide evidence they have
completed an agreed level of financial and business training program(s),
including principles of commercial contract law, developed in consultation with
industry bodies; and
-
that licence holders demonstrate that they are a fit and
proper person to hold a licence.
Recommendation 34
11.39 The committee recommends that automated
cross-agency data sharing should trigger an alert when an individual: declares
bankruptcy; is convicted of fraud; is disqualified as a director; or liquidates
a company. This alert should require the relevant state or territory regulator
to satisfy itself that the licence-holder remains a fit and proper person.
Recommendation 35
12.37 The committee recommends that the government,
through the work of the Legislative and Governance Forum for Corporations establish
a beneficial owners' register.
Recommendation 36
12.38 The committee recommends that section 117 of the Corporations
Act 2001 (Cth) be amended to require that, at the time of company
registration, directors must also provide a Director Identification Number.
Recommendation 37
12.39 The committee recommends that a Director
Identification Number should be obtained from ASIC after an individual proves
their identity in line with the National Identity Proofing Guidelines.
Recommendation 38
12.40 The committee recommends that the Australian
Securities and Investment Commission Act 2001 (Cth) be amended to require
ASIC to verify company information.
Recommendation 39
12.41 The committee recommends that ASIC and Australian
Financial Security Authority company records be available online without
payment of a fee.
Recommendation 40
12.52 The committee recommends that ASIC focus enforcement
action on business advisors specialising in pre-insolvency advice who advise
firms to restructure in order to avoid paying their debts and obligations.
Recommendation 41
12.53 The committee recommends that ASIC publish a
regulatory guide in relation to the nature and scope of pre-appointment advice
given or taken by companies.
Recommendation 42
12.61 The committee recommends that the Corporations
Act 2001 be amended to align with section 64ZB(8) of the Bankruptcy Act
1966.
Recommendation 43
12.62 The committee recommends that firms who provide
business advice be prohibited by way of an amendment to the Corporations Act
from buying into the companies they are advising via debt acquisitions.
Recommendation 44
12.68 The committee recommends that the government,
through the work of the Legislative and Governance Forum for Corporations, give
serious consideration to extending the jurisdiction of the Federal Circuit
Court of Australia to include corporate insolvencies under the Corporations
Act.
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