Having myself nearly said enough over the years about the lack of data on the operation of the insolvency system, the Assistant Treasurer in charge of corporate and personal insolvency, the Hon Dr Andrew Leigh, has reported from a roundtable of the Academy of Social Sciences on 30 July 2025 looking at means to accelerate our ability to share and use our data productively, emphasising the potential for data to better inform our policy and law settings.
This message combines with the Productivity Commission’s interim report – Creating a more dynamic and resilient economy – which was discussed at an open meeting on 4 August, all leading up to the Economic Reform Roundtable on 19-21 August 2025.
In the insolvency context, the 2023 PJC Report on Corporate Insolvency has emphasized the need to gather data to support any comprehensive review of the insolvency system although the relevant data may not need BLADE to extract.
BLADE and PLIDA
As Dr Leigh explained, the Australian Bureau of Statistics hosts two of the country’s largest integrated data assets: the Business Longitudinal Analysis Data Environment (BLADE) and the Person‑Level Integrated Data Asset (PLIDA).
BLADE combines around 29 datasets dating from 2001, including Business Activity Statements (BAS), Pay As You Go (PAYG); Single Touch Payroll and ASIC Insolvency data, surveys of business characteristics, business income and tax records, trade and intellectual property data, and employment conditions.
PLIDA integrates about 30 datasets from 2006 onwards, linking Census data to tax returns, social security payments, migration records, and information on health, education and disability.
“Both assets are longitudinal and expand as new datasets are added for emerging policy questions. By providing a single source of de‑identified unit‑record data on businesses and people, these assets enable analysts to study how firms perform over time and how individuals’ characteristics, service use and outcomes interrelate (Gruen 2024)”.
Dr Leigh said that integrated data is “boosting productivity”, drawing on examples from the federal and state governments, and the private sector.
Analysis using the BLADE dataset also underpinned the 2024 merger reforms, allowing policymakers to see how many mergers were taking place in Australia each year – and that most were not being scrutinised by the ACCC: see the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 Explanatory Memorandum.
Insolvency data
For as long as insolvency inquiries in modern times have been pursued, the lack of data has been an issue. While many of the claimed beneficial outcomes of insolvency are difficult to quantify – investor and creditor confidence; promotion of entrepreneurial conduct; support of entrepreneurialism – other data needed is of such a quantitative nature that it should be readily available.
Net outcomes of asset recoveries
For example, data on what value of assets remains in insolvencies, what assets or moneys are recovered, at what cost and for whose benefit, and what is the net outcome, all constitute basic quantitative data.
AFSA produces some such data, annually, in personal insolvency but not to the extent that is much useful, and in a form static for years.
Comparable data from ASIC is not available.
A law reform suggestion made to government is that liquidators and trustees should disclose the net benefit of recovery litigation, that is, the remuneration and expenses of investigation, preparation of litigation and conduct of hearing, and recovery of any amount awarded, as against the actual amount paid to creditors by way of dividend. This is not a matter of regulation but of data needed for law reform.
The productivity outcomes of such disclosure would greatly assist policy decisions whether certain insolvency recovery processes are to be maintained or streamlined. Any such law reform then needs to be monitored, to assess the worth of the law. That does not much happen.
The aims of insolvent restructuring
The 2023 PJC Report has said we need data to better inform ourselves as to how the system operates. Importantly, we need to [re] settle the aims of insolvency.
For example, if the aim of restructuring is to fairly restore a viable business (as defined) to the market, how that business fares in 12 months time will be relevant, including in comparison with what was presented to creditors. That data would provide assistance in assessing whether the stated aims and criteria for entry of any restructuring reform remain the most appropriate, from both a law and economics perspective.
Undue attention to saving businesses from liquidation – “restructuring euphoria” – goes against the need to maintain a certain “creative destruction”, or “business dynamism”, through business entries and exits.
The question is “how much risk [we] should tolerate in pursuit of business dynamism.”
As the PC explains
“with fewer firms entering and exiting, the economy is not getting a productivity bounce from new firms challenging incumbents”.
This was emphasised by the PC to the 2023 PJC inquiry, that insolvency and business exit play an important part in maintaining that dynamism:
“While some pain attends financial distress … sometimes business exit is an important way for us [to] get economic growth through innovation and different business models …”; and, from the OECD,
“a well-functioning exit margin, which sorts successful market activities from unsuccessful ones, is vital to aggregate productivity growth’.
Without further assessment, we don’t know, in fact insolvency reform does not really take such matters into account.
Tunnel vision
In that respect, at the PC’s public debate on 4 August 2025, the tunnel vision of policy makers and legislators, and professions, was criticised, with their attention being given to their own concerns without regard to economic and other impacts.
Past examples even within insolvency reform might be said to be:
- to introduce administrative recovery rights in corporate insolvency, without regard to comparable mechanisms in bankruptcy; or
- to maintain the need for a court to approve a liquidator’s settlement but not a trustee’s; or
- to attend to business stress of companies but not of individuals; and
- in not only having regulation of liquidator A conducted by ASIC and of A separately as bankruptcy trustee conducted by AFSA, each according to unconnected regulatory criteria, but also in having no structure to allow a comparison of the regulatory costs and in/efficiencies of each.
Law and economics
While the merger data explained by Dr Leigh may have required BLADE access to obtain, insolvency data seems more accessible. With personal insolvency now alongside corporate insolvency within Treasury, thereby perhaps ending siloed law reform, and with highly credentialled Treasury ministers, a belated economics-based approach to relevant data, to supplement that of the law, may hopefully be undertaken.
