Australia’s new 2017 insolvency laws – described by one respected academic as the worst insolvency reforms he has seen in 30 years, and by another, more colourfully, as a dog’s breakfast and more – were prompted by the same sort of media and political debate that we are seeing in relation to the ATO right now. It is no coincidence that the same newspaper writer, Adele Ferguson, is involved.
Back then, Ferguson wrote rather expansively and colourfully, in the lead up to the release of the 2010 Senate report into ASIC’s regulation of liquidators, predicting a “damning” report with “bombshell recommendations”, which would have a “profound effect” on the industry, including by having its “cosy monopoly … busted open to competition”. The insolvency regime’s “high fees, over-servicing, protracted settlements, lack of transparency, conflicts of interest, abuses of power and gross misconduct” were all, apparently, “systemic”.
Indeed, if “reform doesn’t happen soon, the industry will spiral out of control”, we were told. That reform happened in 2017, just in time!
Then the jail sentence of liquidator Stuart Ariff for criminal fraud “symbolise[d] the need for a royal commission into white collar crime and the role of ASIC”; Ferguson querying ASIC’s decision to pursue him “over his conduct in only one company rather than the 15 others that he pleaded guilty to (ie, to which he pleaded guilty) in the NSW Supreme Court in August 2009”; and saying that if the regulator and the industry lobby group (ARITA) had acted earlier, “they might have got back some of the millions of dollars he illegally took from them”— which was news to many.
Ferguson reported a politician, Senator John Williams, as saying that “at least one complaint is made each week to his office about a dodgy liquidator”, with proof of wrongdoings supplied, assuming natural justice was applied in coming to that proof. Then, using the words “incredibly” and “staggering”, we were told of lawyers, auctioneers and property valuers who “huddle together and use hapless victims as their stomping ground”, if we excuse the misapplication of a metaphor.
We see the start of a similar pattern here. A number of dramatic stories about those who have had bad dealings with the ATO, with the other side perhaps not fully explained. (There is always another side). We read of horror stories of stunned taxpayers who are subjected to “defective administration, predetermined outcomes, fabricated debts, denial of procedural fairness and targeted malice”.
Legitimate companies eligible for research and development grants have been “crushed” by the ATO, living proofs are quoted, including someone who was “slugged” (journalists’ favourite word) with a “crushing” (again) tax bill.
Then there are ripping yarns, slaps, demands, and more. (ATO threats to “destroy” a company can’t be right though; probably just liquidating it). Companies are issued with bankruptcy notices by the ATO, we are told.
As I wrote at the time of Ferguson’s earlier reports on insolvency, the popular media has the potential to communicate useful information to the community and to raise matters for debate. In my area, basic reporting on corporate failures, significant recoveries and law reform is mostly accurate, some with insight, though often done lazily by way of quotes from ‘the industry’. When the media tries to crusade on an issue using adjectives like skyrocketing, surging, slugging, crushing and ripping, with singular stories and baleful images, in a complex area like tax recoveries, it all looks like populism.
Which is how, with the politicians then drawn in like flies, our tax laws are in danger of being ‘reformed’ just like our insolvency laws. Thanks guys.
The difference is, the ATO is big and important enough to look after itself, as the politicians know.
Sources: my various articles in the venerable Insolvency Law Bulletin.