The regular insolvency statistics were released by ASIC (corporate) and AFSA (personal) at the end of 2025 but with a current political focus on insolvency reform for small business, we are now facing the reality of past and current inaction in have adequate data to direct meaningful reform.
AFSA statistics show a plateauing or slow fall in numbers during October 2025 (1,116). The current annual number of 11,600 is well below the pre-COVID-19 average of 28,372 personal insolvencies per year.[1]
ASIC reports that, of over 3.6 million registered companies, only 3,556 companies entered external administration during the first three months of the 2025–26 financial year. This is down 2.1% from the 3,633 companies recorded for the same period in 2024–25.
There were 2.8 million actively trading businesses as at 30 June 2025. As we know from [3.22] of the 2023 PJC Report,
“business “exits” play a very important part in maintaining the dynamism of the economy, ensuring that it’s innovative and constantly changing. There is pain associated with financial distress, business exits is an important way to get economic growth through innovation and different business models, allowing productivity growth to occur”.
Hence, while “370,000 businesses pulled down the shutters” in 2025,[2] 437,150 new businesses had started up, both figures being higher than in 2023 and 2024.
The Productivity Commission’s report – Creating a more dynamic and resilient economy Inquiry report No. 109 | 10 December 2025 – refers to Australia’s lack of business dynamism in terms of the low rate of firm exits from and entries into the market.
It refers to the fact that
“in many sectors a small number of big firms exercise market power to the detriment of consumers, while ever more complicated regulatory and tax systems impose higher costs that restrict and distort investment, keeping new entrants from joining or firms from scaling up”.
It goes on to explain that
“with fewer firms entering and exiting, the economy is not getting a productivity bounce from new firms bringing new products and innovative approaches. Most businesses sit below the ‘productivity frontier,’ meaning they are failing to learn or implement best-practice production techniques (PC 2023, p. 4). Few grow into medium and large sized businesses. Lower rates of business investment mean less capital per person, and lower productivity growth”.
International comparisons of business dynamism also show that exit and entry rates have declined for many OECD economies from 2000 to 2015 (OECD 2021a), which given weak and slowing productivity growth, has heightened interest in business “churn” as an indicator of dynamism.[3]
The exits occur for many reasons, beyond insolvency. The low numbers in insolvency are hardly significant in the millions involved. But insolvency law does promote saving business rather than having them respond to market conditions and thereby to allow new entrants. There is also the anti-competitive effect of a restructure on the restructured company’s competitors. And as non-payment of tax is said to be anti-competitive, the tax laws allowance of billions in unpaid tax is quite a dampener on market rigour.
“Business related insolvencies”
AFSA also reports on what it calls “business related insolvencies” which it describes as being those of sole traders or partners whose businesses failed or company directors who have given guarantees or incurred other personal liabilities. AFSA reports that 28% of personal insolvencies are business related; however the better percentage – over 40% – is of those in bankruptcy and Part Xs, given that Part IX debt agreement thresholds would exclude most people in business.
What we don’t have from these separate sets of statistics is any real body of information concerning small business failures, where there is a connection between personal and corporate liabilities and assets.
This is a problem given that, as the Assistant Treasury Minister Dr Andrew Leigh recently acknowledged,[4] there is a blurred division between personal and corporate insolvency in the small business sector that makes navigation of assistance difficult, given the separate regimes for business and personal liabilities.
The Small Business Ombudsman explains the issue well, that
“the current insolvency system assumes a neat distinction between a business and an individual, whose distressed financial circumstances do not intersect with one another. Small and family businesses are rarely so neatly arranged”. Rather “we’ve got the oil of an enterprise and the water of an individual. In the space we operate in, virtually everything is salad dressing—it’s a combination”.
The Ombudsman reports that the operations of many small businesses are secured by a mortgage over the family home.
Reforms in that area are being considered – An outline of arguments supporting a combined personal and corporate insolvency regime for small business – Murrays Legal with Dr Amanda Bull but it is difficult to do so constructively without good data – for example, as to the extent to which personal guarantees are given for company debts and the extent to which they are enforced, and enforced to bankruptcy.
2010-2026
Over fifteen years ago, back in 2010, it was recommended that a joint personal and corporate insolvency statistics unit be established, given the limits placed on quality insolvency reform by the lack of relevant data.[5]
Given the impenetrable divide between the two separate bodies of insolvency, and AFSA and ASIC, that never occurred and has not to this day. We are living with the consequences of knowing little about the intersection of corporate and consumer debt.
Dr Leigh, having referred to the “particular concern” highlighted in the 2023 PJC report about the difficulties in navigating between corporate and personal insolvency in relation to the insolvency of small businesses, will now find that there is little relevant data on that intersection, despite past recommendations.
But even now, in 2026, it should be possible for the two agencies – AFSA and ASIC – to coordinate useful statistics, in particular given they are both now in the one department of Treasury.
Recently Dr Leigh spoke of the value of data driven policy and he has spoken of the merits of Business Longitudinal Analysis Data Environment (BLADE) and Person Level Integrated Data Asset (PLIDA) and other government databases,[6] access to which is a necessary precondition to well directed law reform. The 2023 PJC report recommended collection of data to support any further comprehensive inquiry and reform. The IMF has warned of “legislating in the dark” in the absence of such data.[7]
This is not the usual “we need more data” plea but rather that AFSA and ASIC coordinate the existing data they collect. Better still, amalgamate their insolvency roles, as also recommended back in 2010.
Insolvency policy is now wholly contained within Treasury, with, presumably, no internal administrative separation between personal and corporate insolvency. Treasury’s traditional focus on the need for economic data to direct policy should now provide an opportunity for a co-ordinated approach to efficiently and productively deal with law reform to support small business distress.
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[1] State of the Personal Insolvency System 2024-25 | Australian Financial Security Authority
[2] The Australian, 17 December 205.
[3] Parliamentary inquiry into promoting economic dynamism, competition and business formation, PC submission no 1. See the final report Better Competition, Better Prices, March 2024.
[4] Address to the Australian Financial Security Authority Summit, Sydney | Treasury Ministers
[5] The Senate Economics References Committee, The regulation, registration and remuneration of insolvency practitioners in Australia: the case for a new framework, September 2010.
[6] Address to ‘Unlocking value: better use of integrated government data for evidence‑based policy’ Policy Roundtable, Academy of the Social Sciences in Australia | Treasury Ministers
[7] Legislating in the dark – continued – IMF Report – Murrays Legal
